Ripple Acquires Hidden Road for $12.5 Billion, Expands Institutional Reach

Ripple, a leading cryptocurrency company, has agreed to acquire Hidden Road, a prominent institutional brokerage firm, for $12.5 billion. This acquisition marks Ripple's largest deal to date and signifies a significant expansion into the institutional investment sector. Hidden Road, established in 2018, offers a range of services including clearing, brokerage, and financing for foreign exchange, digital assets, derivatives, swaps, and fixed income. The firm clears over $3 trillion in transactions annually across various markets and serves more than 300 institutional clients, including hedge funds.

This acquisition is notable as one of the largest transactions in the digital asset sector, surpassing Stripe's $11 billion acquisition of Bridge, a stablecoin payment platform. The deal was facilitated by Hidden Road's need for external funding due to limitations in its balance sheet, which constrained its growth. Brad Garlinghouse, Ripple's CEO, highlighted the strategic importance of this acquisition, stating that it is a significant move for both Ripple and the broader industry. As the cryptocurrency sector becomes increasingly integrated with traditional finance, top-tier infrastructure is essential to support financial institutions entering the space.

Ripple, valued at $113 billion in a 2024 stock buyback, plans to integrate Hidden Road's services with its own offerings. One key aspect of this integration is the use of Ripple's RLUSD stablecoin, launched in December 2023, as collateral for Hidden Road's institutional brokerage products. Garlinghouse emphasized the importance of collateral in the institutional brokerage industry, as it is often required by hedge funds and other institutional investors for loans or complex trading positions, such as short selling.

The acquisition is subject to necessary regulatory approvals, with Garlinghouse expecting the deal to close by the third quarter of 2025. This acquisition comes on the heels of a significant regulatory victory for Ripple, as the U.S. Securities and Exchange Commission (SEC) recently dropped a lengthy legal battle against the company, which alleged illegal securities offerings. The favorable regulatory environment, coupled with the potential re-election of Donald Trump, who has been supportive of cryptocurrencies, has provided additional momentum for Ripple's expansion into the institutional brokerage sector. Garlinghouse noted that a supportive regulatory environment makes such transactions more meaningful and less contentious.