Charles Schwab filings reveal XRP ETFs are now backing Wall Street repo loans, marking a major milestone as crypto funds integrate into traditional bank financing. | Credit: CCN.com
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Key Takeaways
Four US spot XRP ETFs appeared as collateral in repurchase agreements held by a Schwab money market fund as of Aug. 31.
At least $8.32 million of XRP ETF shares appeared in the collateral baskets, up roughly 20-fold from May.
JPMorgan Securities and BofA Securities were counterparties to five repos totaling about $3.99 billion.
XRP exchange-traded funds (ETFs) are moving beyond investment portfolios and into Wall Street’s short-term funding machinery.
Four spot XRP products from Grayscale, Canary, Franklin, and Bitwise were used as collateral for repurchase agreements held by the Schwab Prime Advantage Money Fund, according to Schwab’s latest regulatory filing as of Aug. 31.
The development does not mean Schwab’s fund bought XRP ETFs. Instead, broker-dealers borrowed cash through repo transactions, pledging baskets of securities as collateral. XRP ETF shares were among those securities.
The amount is still small, but its growth is notable.
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At least $8.32 million of XRP ETF collateral appeared in Schwab’s August filing, compared with $406,991 in May, $1.99 million in June, and $2.29 million in July.
That represents roughly a 20-fold increase in three months.
The ETFs appeared in five non-cleared repo agreements totaling $3.99 billion. JPMorgan Securities was a counterparty to four, while BofA Securities was a counterparty to another $919.5 million agreement containing all four spot XRP funds.
Charles Schwab money market funds are using FOUR spot XRP ETFs (Grayscale, Canary, Franklin, Bitwise) as REPO COLLATERAL.
Size: $4B, Counterparties: JPMorgan & Bank of America XRP ETF collateral went from $36K → $8.32M in just 4 months (20x).
The significance is less about $8.3 million itself than where the securities are appearing.
Repos are essentially short-term secured loans: one institution receives cash while providing securities as collateral, with an agreement to reverse the transaction later. They form a critical part of Wall Street’s funding infrastructure.
The US repo market is now estimated at roughly $12.6 trillion, according to US Treasury figures cited by the Financial Times.
XRP ETF shares entering those collateral baskets suggest the products are beginning to function as financeable securities rather than simply vehicles for gaining XRP price exposure.
Ripple Is Building Repo Settlement on XRPL
The development is particularly interesting because Ripple is separately targeting the repo market at the blockchain infrastructure level.
In an Aug. 12 GitHub discussion about a proposed On-Chain Cosigner feature, Ripple product manager Shota confirmed the company is “building repo settlement on XRPL,” explaining that institutional counterparties need to jointly authorize atomic settlement transactions. He identified Ripple Custody as the immediate customer for the proposed system.
GitHub comment from a Ripple developer detailing plans for XRPL-native repo settlement. | Source: GitHub
The disclosure builds on Ripple’s earlier plans for Hidden Road, now Ripple Prime, to migrate post-trade activity onto XRPL. Ripple Prime currently clears more than $3 trillion annually across markets including digital assets, FX, swaps, fixed-income repo and derivatives.
Two Different Routes Into Wall Street’s Plumbing
The two developments should not be conflated.
XRP ETFs are being used as repo collateral in the traditional financial system, while Ripple’s XRPL initiative aims to move aspects of repo settlement onchain.
No evidence yet suggests Ripple will use XRP as collateral or a settlement currency in its repo system. Ripple has not disclosed the counterparties, underlying assets, launch date, or whether XRP or RLUSD will sit on either side of those transactions.
Still, XRP’s institutional footprint is developing along two parallel tracks: regulated XRP investment products are beginning to emerge within conventional Wall Street funding arrangements, while Ripple is attempting to place parts of that same funding infrastructure directly on XRPL.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
