Ripple Prime Gains Issuer Ratings With ‘Strong Capital Position,’ Including XRP Holdings

Ripple Prime, Ripple’s multi-asset prime brokerage, has gained an issuer rating from KBRA. The rating agency highlighted the crypto firm’s strong capital position, including its XRP holdings, as one of the reasons for this issuer rating.

KBRA Assigns Ripple Prime Issuer Ratings Of BBB

In a press release, KBRA announced that it has assigned Ripple Prime issuer ratings of BBB. The agency alluded to the crypto firm’s strong capital position, noting that Ripple maintains a strong capital position, with nearly $5 billion in cash as of the third quarter of last year.

KBRA also cited the firm’s XRP holdings with 40 billion coins as of the third quarter of last year. “Profitability at the parent has been favorable in recent years, although earnings are largely driven by digital asset activity, including XRP sales,” the agency noted.

However, the credit rating agency added that Ripple’s revenue remains concentrated and may be sensitive to the XRP price volatility and liquidity conditions, especially during a prolonged bear market. It is worth noting that Ripple acquired Hidden Road last year, which rebranded to Ripple Prime.

KBRA stated that alignment of the operating company and holding company issuer ratings reflects expected parental support. The agency opined that, in the event of a debt issuance or if regulatory or liquidity constraints limited dividends from the operating company, Ripple would likely provide financial support. “The parent’s strong financial backing is therefore a key consideration in both ratings,” the agency said.

The Brokerage’s Growing Balance Sheet

The credit agency also noted that Ripple Prime’s balance sheet has grown significantly over the past twelve months and that the firm achieved profitability last year, partly thanks to substantial capital injections from its parent company. KBRA added that the firm’s activities are more concentrated than those of its similarly rated peers, but that its management has a proven track record and has articulated a strategy to diversify the platform.

Part of these plans to diversify the platform likely include the integration of crypto trading. Notably, earlier this year, Ripple Prime added support for Hyperliquid as its first DeFi venue. More recently, Ripple Prime added support for BTC, ETH, SOL, and XRP derivatives through Coinbase derivatives.

KBRA stated that the issuer rating for the brokerage recognizes that its business model is in a scaling phase, with a primary focus on clearing and intermediation services within its exchange-traded derivatives (ETD) platform. The agency added that there are similar activities within fixed income repo, which reached meaningful scale last year.