Ripple's Hidden Road Secures FINRA License, Expands Fixed-Income Services

Hidden Road, a prime brokerage firm recently acquired by Ripple for $1.25 billion, has successfully obtained a broker-dealer license from the Financial Industry Regulatory Authority (FINRA). This achievement significantly enhances Hidden Road's capabilities in the fixed-income markets.

With the FINRA license, Hidden Road can now further develop its fixed-income prime brokerage services and extend its capabilities in traditional markets. This includes offering institutional clients regulatory-compliant clearing and financing services across fixed-income securities. The company announced this development on April 17.

Membership in FINRA is seen as a significant commitment to compliance and investor protection. It also boosts the credibility of registrants in the eyes of investment bankers. Hidden Road operates a prime brokerage and credit network, clearing more than $10 billion in daily transactions on behalf of over 300 institutional clients. Founded in 2018, Hidden Road initially focused on foreign exchange markets before expanding into digital assets.

These strengths made Hidden Road an attractive acquisition target for Ripple, a blockchain payments network. Ripple completed the acquisition on April 8. Ripple’s chief technology officer, David Schwartz, described the acquisition as a “defining moment for the XRP Ledger” by expanding the settlement layer’s use cases across traditional financial markets.

Under Ripple, Hidden Road is poised to “exponentially expand its capacity to service its pipeline and become the largest non-bank prime broker globally,” according to Ripple CEO Brad Garlinghouse.

Ripple’s acquisition of Hidden Road follows a favorable regulatory environment in the United States. In January, Ripple secured money transmitter licenses in both Texas and New York, allowing the company to facilitate capital transfers within those states. Two months later, the Securities and Exchange Commission (SEC) dropped its lawsuit against Ripple, ending one of crypto’s longest legal battles and positioning the company to focus on expansion.

Crypto lawyer John Deaton noted that the SEC's decision is the “final exclamation point that [XRP tokens] are considered digital commodities, not securities.” Additionally, the SEC is set to get a pro-crypto Chair after Paul Atkins’ nomination was approved by the US Senate on April 9. Once sworn in, Atkins will take over from Mark Yueda, who has served as Acting Chair since January 20.