New York has been pushing through BitLicense approvals recently, with itBit being granted permission to enable people to trade Stellar Lumens on their exchange in New York. Now Square has been approved to conduct business in New York as a cryptocurrency exchange, and the company’s stock prices have jumped to a 52-week high, surging 88% this year to approximately $65 on Monday.
When New York first came out with BitLicense, it joined the war on cryptocurrency, and drove a dozen companies out of the state with high costs and strict requirements. The smaller startups never came back, but some of the larger, more established companies like Square are starting to gain approval. We might attribute this to the upcoming election for Governor of New York. Cuomo may have realized that driving innovation out of the state of New York would be a major talking point. With Square, itBit, and others getting approved, it will be harder for his opposition to support the claim that has been true until now, if these companies start coming back to the state due to a more business-friendly approval process.
The Square app became a serious competitor to Paypal, and has been adopted by many small businesses and freelancers as a way to charge for their products and services. Since January, Square has expanded to include cryptocurrency trading in its platform. However, the company did not have approval to conduct cryptocurrency trades in New York State until now. In an interview with CNBC, analyst Dan Dolev said, “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.”
Square has had a money-transmitter license in New York since 2015. Now that they have received a virtual currency license in New York, they will have access to an “expanding and well-regulated virtual currency market,” according to New York State Department of Financial Services Superintendent, Maria T. Vullo.
Downloads of the Square cash app have increased on average 128% growth month-over-month since early 2016. By comparison, Venmo has increased just 74% growth when measured in the same way. With this approval, we may see more downloads of the app, as users will have greater flexibility in both cash and crypto transactions.
If we look at the Square business model since inception, it enables people to conduct business with one another with ease, where mobile phones become credit card processing machines. In this way, it’s possible that Square may expand beyond just offering crypto trades, to enable users to accept cryptocurrency payments through their platform. Such functionality would be highly transformative in the way people conduct business with one another, as it will serve as more of a multi-currency e-wallet.
Square had 7 million active customers in December 2017, where many of the members were using the service as a virtual bank account. This, combined with crypto trades, may be an indicator that Square will enter the realm of online banking. Regardless, Square is the ninth company to be approved for cryptocurrency trading in New York State.