A fund that promises twice the daily move of Sandisk stock is paying a crypto company roughly 8% a year to make that promise work. That company is Ripple, and it’s now in a corner of Wall Street that big banks and securities firms have run for a long time.
Ripple Prime, the company’s prime brokerage division, is financing leveraged exchange-traded funds, The Wall Street Journal reported Wednesday. These are the funds that let investors multiply the daily swings of individual stocks and market indexes.
How the plumbing works
A leveraged ETF doesn’t have to buy twice its assets in the stock it tracks. Take a fund that promises twice the daily return of Nvidia. It can sign a contract called a total return swap instead of buying the extra Nvidia shares.
On the other side, a broker provides the exposure. It usually hedges its own risk by buying the stock or making other trades, and it charges the fund a financing fee. That fee is where Ripple makes its money.
The 8% number
The Journal reported that the Tradr 2X Long SNDK Daily ETF, which targets twice the daily movement of memory-chip maker Sandisk, pays Ripple the overnight bank funding rate plus four percentage points. The overnight bank funding rate is a benchmark for what banks pay to borrow overnight.
At current rates, that comes out to an annualized financing rate of roughly 8%. It’s charged on the swap exposure, and it’s separate from the ETF’s management fee. So if you hold a fund like this, you’re paying for the leverage in two places, and only one of them shows up on the fact sheet as a management fee.
Why a crypto firm can get in
The market is big. According to Morningstar Direct data, the U.S. now has 593 leveraged ETFs holding more than $256 billion, and 426 of them track individual stocks.
Banks have supplied much of the financing behind those funds. But tighter capital and risk requirements have opened room for nonbank firms like Ripple Prime, Jane Street and Clear Street.
Ripple didn’t build this operation from scratch. It paid $1.25 billion in October 2025 for Hidden Road, a multi-asset prime brokerage. That deal gave Ripple a working business that clears trades, finances investment positions and handles transactions across stocks, bonds, currencies and digital assets.
Then in August, Ripple launched its Delta One business, which offers total return swaps tied to U.S. stocks, market indexes and digital assets. The company said at the time the operation had more than $1 billion in regulatory net capital. It also said it had finished a $275 million senior debt offering to help pay for further growth.
And on Tuesday, Ripple announced an expanded agreement with hedge fund manager Brevan Howard. Under that deal, Ripple Prime will provide brokerage, clearing and financing services across multiple asset classes.
The risk isn’t theoretical
Leveraged ETFs reset their exposure every day. If a single stock moves sharply and the fund doesn’t have enough assets to cover the losses, the financing firm on the other side of the swap can be left holding the exposure.
That’s the trade-off behind the fee income. The business ties Ripple’s revenue to stock trading and institutional financing, which is a long way from cross-border payments.
One thing Ripple hasn’t said is how much revenue its leveraged ETF financing brings in. It also hasn’t disclosed how much of that activity uses XRP or the XRP Ledger. If you hold XRP and you’re wondering what a Sandisk swap means for your token, Ripple hasn’t given you an answer yet.
