Ripple Profits from Leveraged ETF Financing, Expanding Into Bank-Dominated Territory

The annualized financing rate stands at roughly 8% at prevailing rates, applied to swap exposure and distinct from the ETF’s management fee.

The U.S. market now hosts 593 leveraged ETFs with more than $256 billion in assets, including 426 funds tracking individual stocks, per Morningstar Direct data.

Banks have historically provided much of this financing, but tighter capital and risk requirements have opened the door for nonbank players such as Ripple Prime, Jane Street, and Clear Street.

Ripple launched its Delta One business in August, offering total return swaps tied to U.S. stocks, market indexes, and digital assets. At launch, the operation reported more than $1 billion in regulatory net capital and completed a $275 million senior debt offering to support further growth.

The company also announced an expanded agreement with hedge fund manager Brevan Howard, under which Ripple Prime will provide brokerage, clearing, and financing services across multiple asset classes.

Because leveraged ETFs reset exposure daily, sharp moves in individual stocks can leave financing firms exposed if a fund’s assets are insufficient to cover losses.

The business generates fee income tied to stock trading and institutional financing. However, Ripple has not disclosed how much revenue its leveraged ETF financing produces or how much of that activity involves XRP or the XRP Ledger.

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