Square just became the 9th Bitlicense holder. The company now has Bitcoin trading through the Cash App in most states. They are looking to expand their services by applying for a banking license.
Square is a point-of-sale hardware and money transmission services company that uses innovative features to allow sellers to accept contactless payments and credit cards.
In early 2017, Square subsidiary, Cash app, entered into a partnership with Genesis Global Trading to enable the buying and selling of bitcoin through its platform. It had approval in most states, but New York was by far the biggest one without Bitcoin. Nationwide regulation is being called for by many.
Genesis Global Trading is one of the earliest OTC cryptocurrency trading platforms to reach institutional investors. It was founded in 2004 and entering the industry as one of the few NYDFS regulated trading partners in 2013.
The app is in direct competition with Venmo, and since early 2016, downloads on Square Cash app downloads averaged 128% percent year-over-year growth each month versus Venmo’s 74%. Circle is now offering many similar service to theses two companies.
Cash App totals 7 million active users. Many of those customers have been using the Cash app more like a bank account than the company intended, CEO jack Dorsey said in May.
Jack Dorsey said they plan to “lean into” the trend. Square filed for an FDIC license to be an industrial loan company in Utah, American Banker reported in September.
The new bank will offer loans to small businesses and deposit products, similar to what Square Capital already does in partnership with Celtic Bank. The license means that Square will be able to offer loans without relying on a partner bank to issue them. Square says that it has lent more than $1.8 billion to over 140,000 businesses, with an average loan size of $6,000.
Square is the third financial-technology company opting to pursue a banking license in recent months. The other two are online lender Social Finance Inc. and mobile-banking startup Varo Money Inc.