XRP Issuer Ripple Earns About 8% Annualized Fees on Leveraged ETF Swaps

Swap Fees Near 8% of Fund Assets

Ripple, the company behind XRP, has built one of the leading swap-financing desks serving leveraged exchange-traded funds, and the fees it earns on individual products run far above a typical fund's management charge. Regulatory disclosures show that the Trader 2X Long SNDK Daily ETF pays Ripple a financing fee set at the bank overnight funding rate plus 4 percentage points; on an annualized basis that equals roughly 8% of the fund's assets. Most leveraged ETFs charge investors about 1% in management fees, and the swap cost is booked separately into net asset value, so the financing line alone can dwarf the headline expense ratio. That gap between swap pricing and fund fees is the core of the business. A leveraged ETF is built to deliver two or three times the daily return of an underlying asset. Issuers obtain that exposure through total return swaps, contracts in which a counterparty, here Ripple, agrees to pay the fund's multiplied return in exchange for a fee and then hedges its own book with equities or other derivatives. The structure earns the counterparty a steady fee on every dollar of notional it carries, which is why large banks historically treated swap financing as a dependable profit center. The addressable market has grown quickly: figures from Morningstar Direct show 593 leveraged ETFs in the United States holding more than $256 billion in assets, with 426 tracking individual stocks, and the product class expanded fast after regulators permitted it in 2022. Ripple Prime, the brokerage unit Ripple operates, already trades with several ETF issuers in this market, and sponsors new to leveraged products often lack standing bank relationships. The push into traditional financing arrives as the XRP price slipped 5.4% over the past 24 hours in our live monitoring, a move traders tracking XRP technical analysis will read against the issuer's new revenue base.

Hidden Road, Brevan Howard and the Bank Gap

Ripple reached this position through acquisition. Last year it paid $1.25 billion for Hidden Road, a prime brokerage, and folded the business into a unit it now operates as Ripple Prime. Hidden Road was built for institutional digital asset trading, and Ripple has since scaled it for traditional collateral, margin and clearing work. The desk serves multiple ETF issuers as a swap counterparty and recently confirmed that hedge fund Brevan Howard receives prime brokerage, clearing and financing services from Ripple Prime, a $35 billion Brevan Howard mandate that pushes the franchise beyond ETF products. Ripple Prime president Noel Kimmel described the swap business as growing and taking up a meaningful share of operations, and management plans to court additional asset managers as clients. The opening exists because of regulation. Banks face strict capital treatment on the risk they carry as swap counterparties, while many newly launched leveraged ETF sponsors lack long-standing trading relationships with banks, leaving room for nonbank providers. Ripple, Jane Street and Clear Street have all stepped into that gap, and each new sponsor that launches without a bank line is potential counterparty revenue for Ripple Prime. The economics carry real risk. If an underlying asset collapses in a single session, a leveraged ETF's capital can be effectively exhausted, leaving the swap counterparty holding losses. Dan Aronson, head of Janus Henderson's specialist consulting group, pointed to a stock dropping more than 50% in one day and wiping out the fund as the worst case, which is why swap providers hedge their exposure with other asset managers and market makers. Investors face their own arithmetic: swap costs, daily compounding and volatility stack against long-term holders, so a leveraged fund kept for months can badly lag its underlying asset, a dynamic familiar to traders who compare leveraged products with perpetual futures in crypto.

Dollar Fees With Tail Risk

For the wider XRP ecosystem, the reading is revenue diversification. Ripple has spent years layering payments, custody and PayFi services on top of its settlement network, including a Meritz Securities custody partnership in South Korea, and leveraged ETF swap financing adds a fee stream earned in dollars rather than in token demand. That cushion matters when trading revenue compresses across a bear market. The risk side is equally concrete: Ripple Prime is now counterparty to products that can be exhausted in one session, and neither Ripple nor the ETF issuers have disclosed total swap notional or aggregate fee revenue, so the 8% case reads as a disclosed example, not a book-wide average. The disclosed economics contrast with the spot side, where Bitwise has led XRP ETF inflows for 12 straight weeks.