Ripple’s recent acquisition of prime broker Hidden Road has made a significant mark in the cryptocurrency landscape with the launch of a new service tailored for institutional investors in the United States. Announced on May 28, the service enables US institutional clients to engage in cash-settled over-the-counter (OTC) swaps, facilitating trades across multiple major crypto assets.
The initiative is part of Hidden Road Partners, the broker’s entity regulated by the United Kingdom’s Financial Conduct Authority (FCA). This service comes in the wake of Ripple’s acquisition of Hidden Road for $1.25 billion, positioning Ripple, the creator of XRP, as a forerunner among crypto firms owning and operating a global multi-asset prime broker.
Understanding Crypto OTC Swaps
OTC swaps are private, off-exchange trading agreements where traders directly exchange cryptocurrency assets. These transactions are typically preferred for large trades, as they help avoid disruptions to market prices. Michael Higgins, Hidden Road’s global CEO, noted that although OTC swaps constitute a significant part of global digital asset trading volumes, they have been “largely unavailable to US institutions.”
Higgins emphasized that the digital asset market in the United States has been inadequately served from a product perspective, highlighting an opportunity for growth and development. While specific figures on crypto OTC trading volumes were not disclosed, reports from Finery Markets indicate a staggering 106% jump in institutional OTC volumes in 2023.
Institutional Demand on the Rise
The launch of Hidden Road’s OTC swap service highlights a growing interest from large institutional investors. In December 2024, Higgins pointed out in an interview with Finance Magnates the rising demand for institutional solutions that bridge traditional finance and digital assets. As the industry converges, Hidden Road is positioned to cater to this unique market demand.
Following its acquisition by Ripple, Hidden Road has made strides in establishing itself as a licensed broker-dealer in the United States, receiving approval from the Financial Industry Regulatory Authority (FINRA). Moreover, the company has been proactive in the European market as well, being among the first to obtain a Markets in Crypto-Assets (MiCA) license under the new regulatory framework.
In conclusion, Hidden Road’s OTC swaps for US institutions represent a pivotal move toward accommodating a previously underserved segment of the market. As institutional demand continues to grow, Ripple is poised to leverage its acquisition to enhance market presence and offer innovative solutions in the cryptocurrency space.
