Prime brokerage Hidden Road, which was recently acquired by Ripple for $1.25 billion, has secured a broker-dealer license from the Financial Industry Regulatory Authority (FINRA) — a move that enhances its capacity in the fixed-income markets.
As a FINRA broker-dealer, Hidden Road can further develop its fixed-income prime brokerage services and extend its capabilities in traditional markets, the company announced on April 17. This includes offering institutional clients regulatory-compliant clearing and financing services across fixed-income securities.
Membership in FINRA is considered a significant commitment to compliance and investor protection. It also boosts registrants’ credibility in the eyes of investment bankers, according to Telos Capital Advisors, a Dallas-based investment bank.
Hidden Road operates a prime brokerage and credit network, clearing more than $10 billion in daily transactions on behalf of more than 300 institutional clients. When it was founded in 2018, Hidden Road focused mainly on foreign exchange markets before expanding into digital assets.
These strengths positioned Hidden Road as an attractive acquisition for blockchain payments network Ripple, which ultimately purchased the company 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 will “exponentially expand its capacity to service its pipeline and become the largest non-bank prime broker globally,” said CEO Brad Garlinghouse.
Positive regulatory backdrop supports Ripple expansion
Ripple’s acquisition of Hidden Road comes on the heels of a favorable regulatory backdrop in the United States following the election of President Donald Trump.
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 once again focus on expansion.
At the time, crypto lawyer John Deaton said the decision is the “final exclamation point that [XRP tokens] are considered digital commodities, not securities.”
The SEC is about to get a pro-crypto Chair after Paul Atkins’ nomination was approved by the US Senate on April 9. Once he’s sworn in, Atkins will take the reins from Mark Yueda, who has served as Acting Chair since Jan. 20.