Square has recieved the go-ahead from regulators allowing New Yorkers to trade cryptocurrency on the its rapidly growing Cash app. While Square launched crypto trading through its payments app in late January, that feature had been unavailable in New York.
“That was one of the missing pieces in their puzzle,” comments Nomura Instinet analyst Dan Dolev. “They had approval in most states, but New York was by far the biggest one where you couldn’t trade bitcoin.”
The New York State Department of Financial Services granted Square a virtual currency license, which gives the company access to an “expanding and well-regulated virtual currency market,” Superintendent Maria T. Vullo said in a statement.
Square already holds a money-transmitter license from the department. The Cash app launched in 2015 and is growing at a faster rate than PayPal‘s Venmo, according to Nomura Instinet. Since early 2016, downloads on Square Cash app downloads averaged 128% year-over-year growth each month versus Venmo’s 74% growth.
The department approval could boost already rapidly-growing downloads, and expand what users can do with the Cash app. This announcement gives people another excuse to download the app, however it might not move the bottom line right away but “definitely helps from a marketing perspective.”
Shares of the company have surged 88% this year, and hit a record around $65 Monday, up more than 2% on the day.
Square had 7 million active customers on its money-transfer app in December alone, Square said in its recent quarterly letter to shareholders. Many of those customers have been using the Cash app more like a bank account than the company intended, Dorsey said in May.
While that wasn’t a goal, Dorsey said Square plans to “lean into” the trend, and has already signaled plans to break into banking.
Square filed for an FDIC license to be an industrial loan company in Utah, American Banker reported in September. The license would allow it to perform some of the same services as banks, including issuing loans without having to rely on a bank to originate them and without having to get licenses in each state.