Ripple acquisition Hidden Road secures FINRA registration
Hidden Road, which is owned by Ripple, has become a member of the Financial Industry Regulatory Authority, expanding its broker-dealer capabilities. Ripple just bought Prime Broking Hidden Road for $1.25 billion, and it now has a broker-dealer license from the Financial Industry Regulatory Authority (FINRA). This transaction increases its capability in the fixed-income markets.
Hidden Road announced on April 17 that becoming a FINRA broker-dealer will allow it to expand its fixed-income prime broking services and capabilities in traditional markets. This includes providing institutional clients with regulatory-compliant clearing and financing services for fixed-income securities.
Membership in FINRA is viewed as a strong commitment to compliance and investor safety. It also increases registrants’ credibility in the eyes of investment bankers, according to Telos Capital Advisors, a Dallas-based investment firm.
Hidden Road manages a prime broking and credit network, clearing over $10 billion in daily transactions on behalf of over 300 institutional customers. When Hidden Road was launched in 2018, it concentrated on foreign exchange markets before diversifying into digital assets.
These advantages made Hidden Road an appealing acquisition for blockchain payments network Ripple, which eventually purchased the company on April 8.
David Schwartz, Ripple’s chief technical officer, praised the acquisition as a “defining moment for the XRP Ledger” since it broadened the settlement layer’s use cases outside traditional financial markets.
Hidden Road will “exponentially expand its capacity to service its pipeline and become the largest non-bank prime broker globally,” according to CEO Brad Garlinghouse.
Positive regulatory backdrop supports Ripple expansion
Ripple’s acquisition of Hidden Road comes on the heels of a favourable regulatory environment in the United States following President Donald Trump’s election.
In January, Ripple obtained money transmitter licenses in Texas and New York, allowing the company to enable capital transactions inside those states.
Two months later, the Securities and Exchange Commission (SEC) abandoned its case against Ripple, bringing an end to one of cryptocurrency’s longest legal battles and allowing the company to refocus on expansion.
At the time, crypto lawyer John Deaton stated that the ruling was the “final exclamation point that [XRP tokens] are considered digital commodities, not securities.” The SEC is about to have a pro-crypto Chair after Paul Atkins’ nomination was approved by the US Senate on April 9. Once sworn in, Atkins will succeed Mark Yueda, who has served as acting chair since January 20.
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