Ripple is pursuing a new proposal worth up to $11 billion to acquire Circle, the issuer of USDC stablecoin.
However, the community is expressing concerns that this transaction could cause market confusion and potentially weaken XRP's role. Let's explore why Ripple wants to acquire Circle and what this means for the cryptocurrency market.
Ripple's Reasons for Acquiring Circle?
Ripple, the company behind XRP, has long positioned itself as a cross-border payment solution aimed at replacing traditional systems like SWIFT. However, the rapid growth of stablecoins, including USDC, and their promising future are overshadowing XRP's role.
"They want to buy Circle because stablecoins are rendering XRP's use cases completely useless," X user R89Capital commented.
The user also suggested that Ripple's reason for spending a massive amount on Circle is because they "dumped billions of dollars worth of XRP in retail". This refers to the prolonged Ripple-SEC lawsuit. This perspective was agreed upon by many other X users.
"There has never been a bigger scam in cryptocurrency history than Ripple. This is one of the biggest scams in financial history," R89Capital added.
The claim that USDC could make XRP irrelevant is based on the stablecoin's price stability and widespread adoption by traditional financial institutions (TradFi). With a market cap of $61 billion, USDC is not just a stablecoin but serves as a bridge between traditional finance and blockchain, supported by major organizations.
In this context, acquiring Circle could reach up to $11 billion and would allow Ripple to leverage USDC's position. Additionally, by owning USDC, Ripple can strengthen its foothold in digital finance. The company has recently conducted several acquisitions. Recently, Ripple launched its own stablecoin RLUSD, with a market cap of $310 million, which is minimal compared to USDC.
By acquiring Circle, Ripple can integrate USDC into its ecosystem and expand market share by leveraging relationships with major financial institutions. This move could reduce dependence on XRP, which faces fierce competition with stablecoins and other payment solutions.
Benefits and Risks
However, the cryptocurrency community has expressed deep concerns about this transaction. X user GwartyGwart compared Ripple's acquisition of Circle to "a hooligan buying the Pied Piper", implying potential negative outcomes similar to the TV series Silicon Valley.
Meanwhile, X user 0xShual warned that this transaction could trigger "massive panic" in the market. If Ripple controls USDC, it could centralize power and weaken the decentralized nature of the stablecoin ecosystem. The community fears that Ripple might prioritize its own interests and compromise the transparency and trust USDC has built.
Despite these concerns, the transaction offers an opportunity for Ripple. If the acquisition is successful, Ripple could become a major player in the stablecoin market, competing with rivals like Tether (USDT).
However, with Circle's initial rejection and pressure from competitors like Coinbase, Ripple faces significant challenges in completing the deal. Currently, the Ripple-Circle acquisition is a strategic move that tests Ripple's ambitions to reshape the future of digital finance.
