Ripple is earning fees financing leveraged stock bets, a business long run by banks
Ripple is expanding into the prime brokerage business by financing leveraged stock bets, a sector traditionally dominated by banks. Through its acquisition of Hidden Road, the company now facilitates complex financial instruments like total return swaps.
Why it matters
This move signals a shift in financial services where non-bank entities are increasingly filling gaps left by traditional institutions due to stricter capital requirements.
Its prime brokerage division, Ripple Prime, is supplying financing for funds that let investors multiply the daily moves of individual stocks and market indexes, according to a Wall Street Journal report Wednesday.
Ripple entered the business through its $1.25 billion acquisition of Hidden Road, a multi-asset prime brokerage firm, in October 2025. The deal gave Ripple an established operation that clears trades, finances investment positions and handles transactions across stocks, bonds, currencies and digital assets.
A fund promising twice the daily return of Nvidia can enter into a financial contract called a total return swap rather than buying twice its assets in Nvidia shares. A broker provides the exposure, typically hedging its own risk through stock purchases or other trades, while collecting a financing fee from the fund.
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