Ripple Prime has recently ventured into the U.S. financial market by providing total return swap financing specifically designed for leveraged exchange-traded fund (ETF) issuers. With roughly 593 leveraged ETFs in play and an asset pool surpassing $256 billion as indicated by Morningstar Direct, this marks a significant expansion into a sector traditionally occupied by banking institutions.
It’s essential to clarify that the $256 billion figure includes assets from various ETFs and does not reflect Ripple Prime’s financial performance or capital involvement. This report, released on October 9, 2026, emphasizes the growing prominence of Ripple Prime within institutional finance as a lucrative fee-generating enterprise.
The development highlights a broader trend of non-bank entities taking on roles historically dominated by traditional banks. Stricter regulatory capital requirements provide an opening for these new players. Notably, Ripple’s acquisition of Hidden Road for $1.25 billion has given rise to Ripple Prime, though transactions reported do not confirm a role for XRP or RLUSD in this context.
🚨 Banks are scrambling as Ripple steals Wall Street’s most lucrative side hustle
Ripple Prime is now quietly lending to leveraged ETFs that amplify daily stock price fluctuations, and collecting fees that were previously paid almost exclusively to large banks and broker-dealers. 1 fund (Tradr 2X… pic.twitter.com/YSXGlSqgQB
— Pumpius (@pumpius) October 8, 2026
Understanding Leveraged ETFs and Total Return Swaps
Leveraged ETFs utilize total return swaps and other derivatives to magnify the daily fluctuations of selected stocks or indices. Rather than acquiring full ownership of all requisite securities, an ETF can secure exposure through a swap with a financial institution, compensating the provider with a financing fee.
Providers mitigate exposure by hedging, which may involve acquiring underlying assets or engaging in transactions with market participants. While this setup yields income for the counterparty, it can additionally expose them to risks associated with abrupt fluctuations in the underlying asset, potentially exceeding the fund’s available capital.
A case in point is the Tradr 2X Long SDNK Daily ETF, wherein financing fees were pegged at the overnight bank funding rate plus 4 percentage points, approximating an annualized rate of 8% as of October 7. This system reflects variable rates rather than a fixed rate applicable to Ripple Prime’s clientele.
It is crucial to note that these financing fees are distinct from management fees and contribute to the fund’s net asset value. For investors holding leveraged ETFs long-term, funding costs impact daily resets and compounding, potentially diminishing returns. If a significant drop occurs in the underlying stock, the fund may experience substantial declines, leading to potential losses for the swap counterparty.
The traditional nature of the arrangement indicates that it is more of an institutional lending scenario without evidence indicating that XRP or RLUSD serves as collateral, a settlement medium, or a reference asset. Thus, while Ripple may play a role in a wider payments framework, this does not connect to the specifics of the reported swaps.
The Competitive Landscape of Non-Bank Lending
Breaking news: Ripple Prime arranges swap financing for leveraged ETFs, expanding into markets dominated by traditional banks.
— MSB Intel (@MSBIntel) October 8, 2026
The U.S. has a total of 593 leveraged ETFs, including 426 single-stock funds, with regulatory approval for single-stock leveraged ETFs introduced in 2022. Ripple Prime President Noel Kimmel emphasized that swap financing constitutes an increasingly critical element of their business strategy.
Historically, much of this financing has been under the purview of banks. However, stringent regulations limiting bank risks have facilitated space for non-bank financial institutions to emerge. Noteworthy competitors, like Jane Street and Clear Street, are also advancing in this arena. Ripple Prime is currently engaging with ETF creators and pursuing collaborations with other investment entities such as hedge funds.
Additionally, on October 6, Ripple Prime announced its provision of prime brokerage, clearing, and lending services across various asset classes to Brevan Howard. This expansion aims to extend the company beyond cryptocurrencies, emphasizing revenue possibilities linked to funding positions and managing balance sheet risks. It is important to highlight that Ripple Prime functions as the financier in these arrangements, not as an ETF issuer or asset manager.
Evaluating Ripple’s Growth and Market Positioning
As Ripple diversifies its business interests beyond XRP, understanding its broader revenue strategy contextualizes the importance of institutional fees, though the scale of its current operations in leveraged ETF financing remains unclear.
Metrics to monitor in relation to Ripple include customer acquisition, growth in Ripple Prime’s fundraising activities, and risk management strategies in response to market movements. Current reports do not reveal any earnings from leveraged ETF financing or whether XRP or RLUSD is utilized in this trading context.
The $256 billion market size represents the overall industry and does not indicate Ripple’s share within it. The pivotal inquiries now pertain to Ripple’s funding methods, associated risks, and the potential for its prime brokerage operations to generate substantial fees beyond the sphere of cryptocurrencies and payment solutions.
Disclaimer: Coinspeaker is committed to providing fair and transparent reporting. This article is intended to provide accurate and timely information but should not be taken as financial or investment advice. Market conditions can change rapidly, so we recommend that you verify the information yourself and consult a professional before making any decisions based on this content.
Daniel Frances is a technical writer and Web3 educator specializing in macroeconomics and DeFi mechanisms. A crypto native since 2017, Daniel leverages his background in on-chain analytics to write evidence-based reports and detailed guides. He holds certifications from The Blockchain Council and is dedicated to providing “information acquisition” that breaks through the market hype and discovers the utility of blockchain in the real world.
