Payments company Square, a side venture of Twitter CEO Jack Dorsey, is the ninth firm to have obtained a BitLicense by the New York State Department of Financial Services. Bitcoin purchases first became available on its app in other states in January, but revenue has barely covered the costs in Q1 2018.
Square Becomes Ninth Firm to Obtain BitLicense from New York State
Jack Dorsey, co-founder and CEO of Twitter and avid cryptocurrency enthusiast, was able to obtain a license to operate virtual currency activities in the New York State for its other venture, mobile payments firm Square. Not many companies hold a BitLicense. Square became the ninth firm after the first being issued in September 2015 for Boston-based Circle, according to a report from Business Insider.
Blockchain remittance network Ripple was the runner-up, being granted a license in July 2016, followed by cryptocurrency exchange Coinbase in January 2017. Later that year, Tokyo-based bitFlyer obtained the fourth BitLicense and Genesis Global Trading was awarded the fifth in May 2018. Recently, the New York State seems to have become fertile ground for the issuance of charters as June 2018 saw Hong Kong-based Xapo being granted the sixth license just days before Square.
The New York State Department of Financial Services conducted a comprehensive review of Square’s anti-money laundering, anti-fraud and cybersecurity policies, before providing the license. A BitLicense is required for any company whose business includes receiving, storing, holding or maintaining custody or control of virtual currencies. Buying and selling, as well as performing exchange services, controlling, administering, and issuing cryptocurrencies are also prohibited without the license.
Square, who sells devices for small and medium enterprises (SMEs) to accept credit card payments, has enabled users to buy and sell Bitcoin in its Cash App since January in a few U.S. states. Dorsey said the move had been a ‘pretty contentious move within the company’ in a conference last month, where he explained that openness to Bitcoin remains a source of internal tension within the company. Its new Bitcoin offering channeled $34.1 million in revenue in Q1 2018, but the $33.9 million in costs left a narrow margin for profit. Its most recent earnings report in May attributed the profit to price fluctuations of Bitcoin.
A Bitcoin enthusiast, Dorsey believes cryptocurrencies are an opportunity to get more people to access the financial system. He said he expects Bitcoin to become the world’s single currency in 10 years.
Square’s Bitcoin-friendly approach also allows users to transfer their Bitcoin off the application to more secure storage methods such as hardware or paper wallets. Since the launch of the Bitcoin offering, the Cash App has become a top 25 app in Apple’s App store.