Payment company Ripple enters leveraged ETF swap financing

Crypto-payment company Ripple has extended its business scope to stablecoin issuance and asset custody services, and has occupied a place in the traditional leveraged ETF swap financing market dominated by large banks. The Wall Street Journal disclosed that leveraged ETF managers achieve income targets through total income swaps and derivative instruments, such as leveraging the daily fluctuations of specific stocks or indices; financial institutions charge service fees when providing related contract transactions, and hedge potential risks by purchasing underlying assets or derivatives. Morningstar Direct data shows that there are currently 593 leveraged ETF products in the United States, with a management scale exceeding US$256 billion, of which 426 are single-share leveraged funds. This product type has been approved by regulators in 2022. It is worth noting that Ripple completed the acquisition of Hidden R, a prime broker for crypto hedge funds, in 2023.