Is Ripple’s Hidden Road deal part of a SoftBank-like playbook?

Ripple has made a slew of acquisitions to manage key transaction rails and route them via XRP and its stablecoin, Ripple USD (RLUSD), drawing comparisons to Japanese funding agency SoftBank. 

The $1.25-billion acquisition of Hidden Road on April 8 permits Ripple to make use of RLUSD as collateral within the agency’s prime brokerage merchandise. Hidden Road will even migrate its post-trade operations to the XRP Ledger, the blockchain that underpins cryptocurrency XRP (XRP) and several other of Ripple’s institutional companies.

Omni Network co-founder Austin King is aware of Ripple’s technique firsthand. He offered his startup, Strata Labs, to Ripple in 2019 and describes the strategy as a “SoftBank-type” acquisition technique.

Instead of in-house growth like Google or Meta (previously Facebook), SoftBank constructed its empire via aggressive investments, joint ventures and acquisitions. Ripple appears to be following a related playbook, however not everybody’s satisfied the comparability holds.

The SoftBank mannequin in Ripple

Two offers put SoftBank on the worldwide map: an early investor in Yahoo and the legendary $20-million wager on Alibaba, which exploded to $60 billion when Alibaba went public in 2014. SoftBank recycled its returns into contemporary capital, exits and a sprawling ecosystem. That included the $20-billion transfer into US telecom by way of Sprint and semiconductors via its $31-billion acquisition of UK-based ARM.

“This wide breadth of coverage allowed SoftBank to create synergies across their entire portfolio of companies,” King advised Cointelegraph. “Ripple is performing a similar strategy focused on financial services, but instead of venture bets on Yahoo and Alibaba enabling this, it is XRP.”

Related: Does XRP, SOL or ADA belong in a US crypto reserve?

Considering Ripple’s latest acquisitions, each companies purchase infrastructure as a substitute of constructing it from scratch and deal with their portfolios as ecosystems moderately than one-off investments.

Both firms depend on capital as leverage. SoftBank used its $100-billion Vision Fund to outbid rivals. Ripple additionally has a battle chest of XRP and money. As of March 31, Ripple had 4.56 billion XRP (round $11 billion at present costs) and one other 37.13 billion XRP ($89.8 billion) in escrow.

Acquisitions broaden the footprint for XRP and RLUSD in conventional finance, turning them into embedded elements of custody, brokerage and fee flows. This creates what King describes as a token-fueled flywheel. Ripple makes use of its belongings to accumulate infrastructure, which in flip drives utilization again into these belongings.

“With a full-stack infrastructure, Ripple can embed XRP as the native bridge asset between networks, custodians and tokenized assets. Meanwhile, RLUSD can provide a regulated, USD-pegged unit of account that institutions want,” stated Sid Powell, co-founder and CEO of institutional blockchain lender Maple.

King’s analogy has its skeptics.

“SoftBank operates more as a conglomerate or holding company, taking broader investment positions across industries. On the other hand, Ripple is taking a more focused and product-related approach with its recent acquisitions tied to payment missions and core blockchain,” Powell stated.

Casper Johansen, co-founder of Spartan Group, advised Cointelegraph the comparability appears “a bit stretched,” noting that SoftBank’s success got here from buying and turning round working companies, joint ventures, minority stakes and ultimately exiting some for giant beneficial properties.

Ripple joins the crypto M&A arms race

Instead of spanning telecom, media and chips, Ripple is assembling a monetary infrastructure stack. It acquired custody companies Metaco in 2023 and Standard Custody in 2024. The newest addition, prime dealer Hidden Road, brings 300 institutional shoppers clearing $3 trillion yearly.

“Where Metaco lays the foundation — the vault for storing assets — Hidden Road allows Ripple to leverage its massive balance sheet to turbocharge Hidden Road’s business, in which access to capital — a lot of capital — is critical in order to keep growing and competing,” Johansen stated.

The transfer echoes a broader M&A wave amongst US crypto companies. Kraken lately acquired NinjaTrader for $1.5 billion, whereas Coinbase has acquired Deribit for $2.9 billion.

These acquisitions observe a shift within the US regulatory local weather that’s clearing the runway for crypto companies to scale. For years, firms like Ripple had been caught in limbo, going through lawsuits, enforcement actions and denied entry to primary banking companies beneath Gary Gensler’s Securities and Exchange Commission. 

Related: Ripple celebrates SEC’s dropped enchantment, however crypto guidelines nonetheless not set

While “debanking” stays a concern, trade leaders say momentum is altering. Ripple CEO Brad Garlinghouse stated in a latest media interview that the SEC is anticipated to take a “very constructive and positive” stance towards the trade.

Ripple itself spent years in a authorized battle with the SEC, which sued the corporate in December 2020. On May 8, Ripple and the SEC reached a settlement to formally finish the case, pending courtroom approval.

Ripple’s subsequent strikes embody stablecoins

Garlinghouse stated Ripple intends to proceed exploring acquisitions.

“I wouldn’t be surprised if in the next year or two we saw the acquisition of a large-scale point-of-sale company to expand their territory from backend financial services to more direct consumer payments,” King stated.

On April 30, Bloomberg reported that Ripple made a $4 billion-to-$5 billion bid to accumulate Circle, which was rejected for being too low.

Ripple’s latest strikes present it’s prepared to pursue high-stakes acquisitions, together with performs to soak up stablecoin rivals.

“The practical integration of XRP remains limited since institutions still hesitate to use volatile crypto assets for core settlement,” stated Hadley Stern, chief business officer at Marinade. “RLUSD is more promising, but it still faces major competition from incumbents like USDC and PayPal USD.”

Stablecoin regulation within the US stays unresolved. The Guiding and Establishing National Innovation for US Stablecoins of 2025 Act — often called the GENIUS Act — didn’t move cloture within the Senate on May 8.

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