Ripple is acquiring prime brokerage Hidden Road for $1.25 billion in what is one of the largest deals ever in the crypto industry.
Hidden Road is a prime brokerage, clearing and financing platform that clears $3 trillion annually across markets and has more than 300 institutional customers, including hedge funds. Prime brokerages offer a variety of financial services from custody to financing and securities lending. Interest in crypto prime brokerages grew after the 2022 collapse of FTX as brokers accept counterparty risk.
The agreement surpasses Stripe's $1.1 billion deal to buy stablecoin payments platform Bridge in February. The acquisition is the largest deal
Hidden Road will use
Introducing prime brokerage features into the crypto space "brings the necessary credibility and professional trading services expected in legacy finance to digital assets," the company said in a statement.
Brad Garlinghouse, CEO of Ripple, said the acquisition of the company is essential for the crypto industry to enter its next stage of growth and increase institutional adoption and will allow Ripple to grow.
"We are at an inflection point for the next phase of digital asset adoption – the U.S. market is effectively open for the first time due to the regulatory overhang of the former SEC coming to an end, and the market is maturing to address the needs of traditional finance," Garlinghouse said. "With these tailwinds, we are continuing to pursue opportunities to massively transform the space, leveraging our unique position and strengths of XRP to accelerate our business and enhance our current solutions and technology."
The deal is expected to close within the next few months, barring regulatory approvals. Garlinghouse
Hidden Road, which was founded in 2018, isn't new to Ripple. The digital asset company participated in the prime brokerage's Series B funding round and has been a customer of its platform.
Ripple said the acquisition will make its U.S. dollar-backed stablecoin RLUSD "the first stablecoin to enable cross-margining between the digital asset space and traditional markets." Cross margining is a process of offsetting positions. Excess margin from a trader's margin account is transferred to another one of the trader's margin accounts to satisfy maintenance margin requirements. Ripple launched the stablecoin in December.
It also sees an opportunity to cut costs and increase liquidity for
"With new resources, licenses and added risk capital, this deal will unlock significant growth in Hidden Road's business, allowing us to increase capacity to our customer base, expand into new products, and service more markets and asset classes," Asch said. "Together with Ripple, we're bringing the same level of trust and reliability that institutional clients are accustomed to in traditional markets — designed and optimized for a digital world."
