The stock of merchant services aggregator and mobile payment company Square galloped in the Wall Street yesterday, after it received a cryptocurency trading licence from the Department of Financial Services (DFS) in New York. It is the ninth company to receive BitLicense from the government regulator. Last week, Xapo, a Hong Kong-based wallet and vault provider received BitLicense from the DFS.
Square, which was founded by Twitter CEO Jack Dorsey, already has a money-transmitter license from the DFS. The firm had launched cryptocurrency trading in January, but was unavailable to the residents of New York.
Dan Dolev, a Nomura analyst, told CNBC
“That was one of the missing pieces in their puzzle. They had approval in most states, but New York was by far the biggest one where you couldn’t trade Bitcoin.”
Superintendent Maria Vullo at the New York State Department of Financial Services confirmed that the regulator has given a virtual currency license to Square. Maria further stated that the license allows Square to access an “expanding and well-regulated virtual currency market.”
According to a study conducted by Nomura, Square’s app, which was launched in 2015, is growing at a faster pace than PayPal’s Venmo. Since early 2016, the Square Cash app downloads has been growing at 128% y-o-y, compared with Venmo’s 74% growth. Doley believes that the license could boost the download of the Square Cash app. The mobile payment company had 7 million active clients at the end of December 2017. Dorsey has stated that many of the clients are using the Cash app as a bank account, surpassing the expectations of the company. The popularity of the Cash app has already encouraged Dorsey to plan about venturing into banking. In September, American Banker reported that Square has filed for an FDIC license to become an industrial loan provider in Utah.
The license would also allow the company to offer services similar to that of banks, including issuing loans. Other prominent firms which have received BitLicense from the New York regulator are Coinbase and Circle. However, the organization has only granted charters to Gemini and Paxos, which was formerly known as itBit Trust.
BitLicense is extremely difficult to obtain and New York is one of the strictest places when it comes to cryptocurrency regulations. The stock (NYSE: SQ) price of Square hit a record high of $65 yesterday. The shares, which closed at $66.20 yesterday, have rallied 88% so far this year.
