Circle just bought the last mile — and a different way to make money

The most important number in the story of Circle buying a Singapore payments firm has nothing to do with the deal itself. It's 95. Circle, the company behind the USDC stablecoin, with roughly $73 billion in circulation, announced in September that it would buy a cross-border payments company called Tazapay for $400 million, all in stock. But to understand why Circle is spending its own shares on a middlemen's middleman, you have to start with where Circle's money comes from today: interest on its cash pile.

In its most recent quarter, Circle reported $701 million in revenue, and $668 million of that — about 95% — was what it calls "reserve income". That's the interest Circle earns on the safe, mostly short-term U.S. Treasury assets standing behind every USDC in circulation. Circle is, in a real sense, a giant money-market fund with a crypto wrapper. Its profit moves with the federal funds rate, not primarily with how well it runs a payments business.

The tell is in the latest quarter. Reserve income grew just 5% year over year even though the average amount of USDC in circulation grew 25% — because the interest rate Circle earned on reserves fell by 66 basis points. Circle's payment volume is exploding, and its income is basically flat. That is the structural problem this deal is aimed at, and it's why I think the $400 million is a footnote and the strategy is the story.

Buying the last mile

Tazapay doesn't sound glamorous. It's a Singapore-based B2B platform that helps companies actually move money across borders — the messy, bank-by-bank, local-regulation-by-local-regulation job of getting digital dollars into somebody's real bank account in Indonesia or Brazil or Nigeria. It claims payout rails in more than 100 markets, relationships with 60-plus banking and fintech partners, and about $25 billion in annualized payment volume as of July.

Crypto settles the transfer on the blockchain in minutes. But "minutes" only describes the middle of the journey. The hard, slow, expensive part is the last mile: converting those digital dollars into local currency at a local bank. Under the old correspondent-banking system, a cross-border payment can take three to five days and cost 2% to 7% all-in once wire fees, FX markups, and intermediary deductions are counted. Tazapay's whole reason for existing is to make that last mile cheap and fast — and notably, its own volume is already about 60% settled in stablecoins.

That last number is the quiet engine of the deal. It means Tazapay isn't just infrastructure Circle is buying — it's already a USDC user. The other roughly 40% of its volume, settled in fiat, is a pipeline of customers that Circle can now push toward its own token whenever it's cheaper or faster. Tazapay was an early design partner on Circle's own settlement network, so this isn't a stranger rolling in.

The expensive part isn't the price

So is $400 million for a company with only about $12.4 million in reported revenue, fresh off breaking even, a bad bargain? On the surface it looks like a 20x-to-30x revenue multiple — the kind of price that makes value investors wince. But the payment-volume math tells a different, more charitable story.

As a percentage of the volume Tazapay moves, $400 million is about 1.6%. That's cheap against recent comparable acquisitions: Mastercard and BVNK went for roughly 6% of volume, Stripe and Bridge for about 22%. Tazapay's volume is thin-margin B2B collections and payouts, so it gets a lower multiple - but if Circle can route even a slice of that $25 billion through USDC and charge fees for doing so, the $400 million is small relative to the network it buys.

The stock market wasn't impressed. CRCL fell about 5.75% the day after the announcement, to $96.18. Some of that is the accounting of the deal itself: it's all-stock, roughly 1.6% of shares outstanding, which dilutes existing holders, and the dilution is reflexive — if Circle's shares fall before the deal closes in 2027, it must issue more of them to reach the fixed price. But the bigger concern is what the price says about Circle the investment: at around 7 times book value, it already trades at a steep premium to crypto peers like Coinbase and Block, which trade near 3.6x and 2.2x. Investors are paying a premium for future growth, and this deal only delivers if Circle can actually turn volume into fees.

The honest uncertainty

Nobody should mistake the strategy for the economics. Circle has not disclosed Tazapay's take rate, gross margins, or detailed financials, so the profitability of the acquisition can't be quantified yet. The deal needs regulatory approval, including from Singapore's central bank, and isn't expected to close until 2027 — a year away, with a 15-month allowance if conditions drag. That's a long window for a reflexive dilution risk and an unproven margin story.

What can be said with confidence is what this deal signals. Circle has spent the first year of its public life as a company whose earnings depend almost entirely on where the Fed points interest rates. This acquisition is the clearest admission that it doesn't want to stay that way — that the durable value of USDC, the thing that justifies that premium valuation, is the day it becomes a fee-earning rail for real commerce in the places traditional banking serves worst. Buying the last mile doesn't prove that thesis. It just makes the test possible. For a shareholder, the question isn't whether $400 million was too much or too little for Tazapay. It's whether Circle's enormous stablecoin volume can ever be converted into durable transaction fees — because that's the only way the price you pay today makes sense.