Ripple Acquires Hidden Road for $1.25 Billion to Boost Institutional Crypto Services

Ripple, a leading figure in the cryptocurrency sector, has announced a major acquisition, purchasing Hidden Road, a prominent prime broker, for $1.25 billion. This acquisition is subject to regulatory approval and is expected to close in the coming months. The deal is strategically aimed at enhancing Ripple's institutional crypto services and attracting a larger base of institutional investors.

Hidden Road is renowned for its prime brokerage services in FX, precious metals, and digital assets. The company will continue to be led by its founder, Marc Asch, who will oversee the prime brokerage operations at Ripple. This acquisition is Ripple's second billion-dollar-plus deal this year, positioning it as the first crypto company to own and operate a global, multi-asset prime broker. Hidden Road, with 300 institutional customers and clearing $3 trillion across all markets annually, brings a substantial client base and extensive market reach to Ripple. This acquisition is anticipated to significantly bolster Ripple's ability to provide funding and clearing services, which are essential functions of a prime broker.

Marc Asch, Founder and CEO of Hidden Road, expressed enthusiasm about the deal, stating that with new resources, licenses, and added risk capital, the acquisition will unlock significant growth in Hidden Road’s business. This will enable the company to increase capacity for its customer base, expand into new products, and service more markets and asset classes. Asch also emphasized that the partnership with Ripple will bring the same level of trust and reliability that institutional clients are accustomed to in traditional markets, designed and optimized for a digital world.

Ripple's acquisition of Hidden Road is strategically aimed at increasing the usage of the XRP Ledger. The company plans to use its RLUSD stablecoin for collateral as margin for trades and intends for Hidden Road to use the XRP Ledger in its back office for recording trades and clearing. This move is expected to enhance the adoption of the XRP Ledger, although it raises questions about privacy concerns for institutional clients who may be wary of using a public blockchain for clearing and settlement.

One potential solution to address privacy concerns is the use of fresh wallets repeatedly, although this approach may not fully obfuscate transactions due to the nature of Hidden Road’s clearing services. Another option could be the use of the Interledger Protocol combined with a private Layer 2 solution. Alternatively, Hidden Road might opt for a private version of the XRP Ledger, which could benefit Ripple Labs more than the XRP price.

Overall, the acquisition of Hidden Road by Ripple represents a significant step in the company's efforts to expand its institutional crypto services and attract more institutional investors. The deal is expected to bring substantial growth and new opportunities for both Ripple and Hidden Road, positioning them as key players in the evolving landscape of digital assets.