Ripple, the company behind the cryptocurrency XRP (XRP), took an important step this week: it took over the Prime Broker Hidden Road for $ 1.25 billion. But how important this message is-and what effects could it have on the XRP course?
The strategic takeover of Hidden Road by Ripple
On Tuesday, April 8th, it became known that Ripple took over the Prime Broker Hidden Road for $ 1.25 billion. It is the greatest purchase in the history of the company so far. Hidden Road, founded in 2018, offers a wide range of financial services – including clearing, prime brokerage and financing in the areas of foreign exchange, digital assets and derivatives. Prime brokerage is aimed specifically at large institutional investors such as hedge funds and includes services such as trade execution and financing. Hidden Road processes more than $ 3 trillion annually and looks after over 300 institutional customers.
With this acquisition, Ripple explains “the first crypto company that has and operates a global multi-asset prime broker”. Brad Garlinghouse, CEO von Ripple, said in one Interview with CNBC: “This is a significant development for Ripple – and for the entire industry.” In view of the increasing overlaps between Crypto And traditional financial markets are crucial to provide a powerful infrastructure for financial institutions that want to get on the market.
From crypto to financial infrastructure
Ripple was founded in 2012 with the aim of creating an efficient and faster payment system than traditional banks offer. Different to Bitcoin (BTC)which is focused on decentralization and individual users, Ripple worked closely with banks and financial institutions right from the start. With the help of its blockchain-based network Ripplenet and the XRP cryptocurrency, the company makes cross-border payments.
A central element of the takeover is the integration of Ripples StableCoin Rlusd into the services of Hidden Road. After completing the takeover, Hidden Road Rlusd will use as a collateral form in its prime brokerage infrastructure. “Consideration is crucial,” said Garlinghouse, since institutional investors typically need them to secure loans or implement complex trade strategies – including short selling.
Positioning in the traditional financial world
Garlinghouse also emphasized the strategic importance of the takeover point in view of a changing regulatory environment in the United States.
“We are at a turning point in the next phase of the adoption of digital assets. The US market opens for the first time because the regulatory pressure of the former SEC leadership ceases to exist-and the markets develop to meet the requirements of traditional financial actors.”
This statement refers to Ripple’s recent victory in the lengthy legal dispute with the US stock exchange supervision Sec.
Positive effects on the XRP course?
What does that mean for XRP? The strategic takeover could strengthen the demand for XRP. Hidden Road will move part of his downstream transactions (post-trade processes) to the XRP Ledger (XRPL) in order to handle transactions faster. Each transaction in the XRPL requires a small fee in XRP. In view of a daily transaction volume of around $ 10 billion in Hidden Road, even a small proportion of these activities via the XRPL could consider considerable demand for XRP generate.
In addition, XRP serves as a bridge currency for cross -border payments and institutional transactions. Even if RLUSD is used as security, XRP remains important for liquidity management and validation within the network. In addition, the takeover of Ripple’s strategy underlines the XRPL as a platform for the tokenization of real assets such as real estate or bonds. Hidden Roads network of over 300 institutional customers offers a direct target group for this type of digital assets – with XRP as a central resolution level.
“Negligible effect on XRP”?
However, there is also criticism. It remains unclear how large the part of the hidden road processes, which is actually transferred to the XRPL. A critic wrote:
“Ripple sold billions to XRP to buy something that uses shareholder from Ripple Labs-not the XRP owner. The use of the XRPL for only Part of the transactions (could literally be 1 %), while RLUSD serves as security, has an absolutely negligible effect on the XRP course. ”