With the start of the week, news has broken that another company has obtained a "BitLicense" from the New York State Department of Financial Services. Square Inc. (SQ), the payments company and brainchild of Jack Dorsey, CEO of Twitter Inc. (TWTR), will be the ninth company to have been granted one of these licenses.
The so-called BitLicense will permit Square to offer bitcoin transaction services through its Cash App, but only to residents of New York state, according to Yahoo Finance.
License Application Procedure
In order to receive the license from the state, Square had to undergo a comprehensive review. This included an examination of the company's app, its anti-money laundering, anti-fraud and cybersecurity policies. Square has previously been granted a money-transmitter license from the New York State Department of Financial Services as well.
The news of Square's successful receipt of a BitLicense should not be taken lightly, particularly in a state with requirements as stringent as New York. For several years, New York has developed a reputation for being strict when it comes to regulation of cryptocurrency businesses. All such firms must obtain a license to hold customer funds, to exchange virtual coins for USD and for other types of operations as well.
New York Transactions Follow Other States
Square, a company based in San Francisco that has risen to prominence for a device that facilitates credit card payments for small businesses, has already enabled bitcoin transactions in other states earlier this year. Dorsey has made a name for himself within the digital currency community for his outspoken support of the industry. As recently as May, Dorsey indicated his preference that bitcoin become the "native" currency of the internet, adding that he's a "huge fan" of the world's leading cryptocurrency. Nonetheless, the decision to offer bitcoin services on Square's Cash App was a "pretty contentious move within the company," Dorsey explained.
However, bitcoin transactions have already proven lucrative for Square in other parts of the country: The company generated $34.1 million in revenue from its new bitcoin services during the first quarter of the year. At the same time, though, Square's costs for providing the services were $33.9 million, according to a recent letter to shareholders.
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