10 ms·

Square obtains NY State cryptocurrency license

196 points by petethomas 8y ago

tedmiston 8y ago
The Square Cash app has had this feature for a few months now. It looks like it just has not been available to residents of New York, Georgia, Hawaii, or Wyoming. https://techcrunch.com/2017/11/14/square-cash-is-letting-some-users-buy-and-sell-bitcoin/ https://techcrunch.com/2017/11/14/square-cash-is-letting-som... https://techcrunch.com/2018/01/31/square-cash-expands-bitcoin-buying-and-selling-to-all-users/ https://techcrunch.com/2018/01/31/square-cash-expands-bitcoi...
- deltateam 8y ago
  Odd feeling when your state has the same restrictions as countries on the OFAC list.
  - microcolonel 8y ago
    Sometimes it feels like NY will pass and keep almost any law, as long as it hurts somebody who has no powerful friends.
    - deltateam 8y ago
      your observation does not lack accuracy
yebyen 8y ago
Apparently according to TFA this is the ninth such license that was awarded? Wikipedia page needs an update, they still only list the first five: https://en.wikipedia.org/wiki/BitLicense https://en.wikipedia.org/wiki/BitLicense (I was only aware of the one that I knew Coinbase held.)
- otoburb 8y ago
  Somebody just updated it[1], ironically from NY state. [1] https://en.wikipedia.org/w/index.php?title=BitLicense&action=history https://en.wikipedia.org/w/index.php?title=BitLicense&action...
  - yebyen 8y ago
    I wonder how Reuters got all the way up to nine! > With the Square approval, DFS has now approved nine firms for virtual currency charters or licenses, while denying those applications that did not meet DFS’s standards. DFS has also granted licenses to Xapo, Inc., Genesis Global Trading Inc., bitFlyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company and Paxos (formerly itBit Trust Company). from the Wiki citation [21] https://www.dfs.ny.gov/about/press/pr1806181.htm https://www.dfs.ny.gov/about/press/pr1806181.htm looks like two are charters, not sure how that's different than a full BitLicense.
asdsa5325 8y ago
It's a shame that Square is getting caught up in this scam. It makes me no longer want to do business with them.
- deltateam 8y ago
  Square is a payment processor and all payment processors are presented with an opportunity to use existing blockchains as the rails for a cheaper money transmission system. Blockchain networks have the capability to be cheaper than the offerings of the SWIFT system, ACH and VISA networks, for the payment processor. Given the state of the technology today, taking advantage of these cost savings in the most network-aligned way requires massive liquidity. Square creating a liquidity solution helps them and grants their customers something they want.
  - glitchc 8y ago
    I'm not buying the cheaper argument. Which part of transacting on the Bitcoin network is cheaper exactly? Mining is cost-intensive, and transaction fees are at least an order of magnitude higher than Visa. Equating SWIFT to Visa is also disingenuous as the former is meant for cross border settlements where the restrictions are regulatory (AML), not technology. Switching to Bitcoin doesn't mean Square or any other institution can simply ignore AML laws. I see this mainly as a service they wish to provide to a segment of their customer. I also expect it to be a loss leader and shut down over time.
    - dick_sucker2 8y ago
      No chargebacks?
      - glitchc 8y ago
        Is that meant as a positive or a negative, as chargebacks help the consumer, as does non-repudiation. The general public wants these features in our exchange mediums.
glitchc 8y ago
How are they going to handle this? Will they be holding coins a la an exchange or will they host multiple full nodes and post txes to the chain?
m3kw9 8y ago
I feel like these higher profile cryptocurrency projects are just still following thru because they’ve been approved at the peak of its hype and fully funded back then.
- clarkmoody 8y ago
  I think Jack Dorsey's interest in Bitcoin goes a little beyond the current hype cycle. [1] https://www.ccn.com/i-hope-bitcoin-will-be-internets-native-currency-twitter-ceo-jack-dorsey/ https://www.ccn.com/i-hope-bitcoin-will-be-internets-native-...
- DINKDINK 8y ago
  The ICO-scam mania is waining, systems that run those ICOs are cooling (Ethereum), but the need for a system of sound, programmable money remains. This is why Square is pursuing Bitcoin.
  - deleted 8y ago
    [deleted]
  - kartan 8y ago
    > the need for a system of sound, programmable money remains I understand that the original goal was to have the value of the currency to be not controlled by a central bank. Is there any other benefit to it? What does it mean that the currency needs to be "programmable" in this context?
    - DINKDINK 8y ago
      Programmable money means that I can download a bitcoin contract that functions as a will without having to pay a lawyer or live in a country with a robust legal system to ensure that: after 180 days of me not moving my funds, my heirs get it, etc See https://bitcointechtalk.com/what-is-a-bitcoin-merklized-abstract-syntax-tree-mast-33fdf2da5e2f https://bitcointechtalk.com/what-is-a-bitcoin-merklized-abst...
      - 8y ago
benarent 8y ago
One interesting product decision with Square Cash and Robinhood Crypto services is that customers can't transfer off as BTC ( to another exchange / hardware wallet) . When I asked Robinhood they said it was so customers didn't user BTC for illegal activity as they hadn't built out specific anti-money laundering measures.
- dawhizkid 8y ago
  I don't think that is true for Square Cash. I can withdraw to a different address off Square - I needed to verify by DL first though.
  - pcmonk 8y ago
    That's correct, you can transfer off Cash app. However, you can't deposit BTC to your Cash app.
  - benarent 8y ago
    Yeah. I found it. https://squareup.com/help/us/en/article/6307 https://squareup.com/help/us/en/article/6307 The menu is pretty hidden.
zitterbewegung 8y ago
I thought that the sentiment at Square was hostile to cryptocurrencies . They stopped accepting bitcoin and also patio11 was skeptical about cryptocurrencies but those views could have been his.
- simonk 8y ago
  patio11 works for Stripe not Square
- paulie_a 8y ago
  They stopped accepting bitcoin for good reason, not hostility. Why would anyone ever want to pay in bitcoin with the massive transaction fees.
  - yebyen 8y ago
    It has gotten better (I actually am of the impression that the transaction volume has gone down, and that's largely to credit for the fact that fees are back down, perhaps because of Lightning and/or Segwit; but regardless of the reason why, there is nobody left who is paying $15-30 in fees for each BTC transaction on the chain today) This great visualization[1] showed up on my feed yesterday, you can see that most of the BTC transactions' fees are being measured in single-digit USD cents again. It compares BTC to BCH, and you have to wait a while to see what's happening, but I think it's a fairly unbiased and basically informative view of how the two on-chain transaction scaling strategies actually work. (Spoiler: the number of BTC transactions is still massively outpacing the number of BCH transactions, in case you didn't guess that.) [1]: https://bitcoinsubway.cash/ https://bitcoinsubway.cash/ [edit: http_s_]
    - paulie_a 8y ago
      What has changed in the past 3 months? A co-worker of mine decided to throw a few bucks into the crypto craze and the fees were about the same as what he wanted to buy.
      - 8y ago
SilasX 8y ago
Wow, "BitLicense" cryptocurrency licenses (in NY) are thing now: https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_fram...
- yebyen 8y ago
  I would never have become a Coinbase user except for all of the press when they got theirs, while I was living in NY. Centralized exchanges are not really my thing, but legal compliance is pretty alright by me, and NY is a notoriously difficult regulatory climate. When I heard that Coinbase might be sending my information to the IRS, it was actually a relief. (Given: I have managed to make not very much on crypto for someone who has been involved in the ecosystem for a while.)
- TaylorGood 8y ago
  There is a "crypto" documentary on Netflix which goes into detail about how this came to be. Spoiler: the sanctioning board have basically all left Gov't to consult privately on best practices to getting the license.
spunker540 8y ago
I think Square has a huge incentive for cryptocurrencies to catch on because almost all their payments and hardware incur credit card fees, licensing fees etc. Not to mention complex and outdated settling mechanisms.
- just_one_time_ 8y ago
  Yes, why is it mostly Bitcoin users pushing for acceptance rather than merchants and payment processors pushing for adoption makes no sense.
adsfgionioni 8y ago
This is a strange situation. Bitcoin is useless at the moment because no one accepts it. But the fees are low, so there is a real incentive to start using it instead of things like credit cards. Let's imagine that a lot of big companies, like Square, start using Bitcoin. Then the network would get saturated (since it doesn't scale) and Bitcoin would become unusably slow and expensive. Bitcoin is useless if it's on the fringe, but it's equally useless if it's widely used. If it's too popular there's an incentive to stop using it, and if it's too unpopular there's an incentive to start. Is there a stable equilibrium where it has some utility? I don't know. A project like this can only succeed if it doesn't succeed too much. Square is big enough that it could single-handedly saturate the Bitcoin network, and I don't know what they'd do then.
ericnyamu12345 8y ago
wow.check out this cool forum http://mawazo.byethost7.com/index.php http://mawazo.byethost7.com/index.php
BloodyHands 8y ago
> New York State legalizes a scam news at 11

196 points by petethomas 8y ago

The Square Cash app has had this feature for a few months now. It looks like it just has not been available to residents of New York, Georgia, Hawaii, or Wyoming. https://techcrunch.com/2017/11/14/square-cash-is-letting-some-users-buy-and-sell-bitcoin/ https://techcrunch.com/2017/11/14/square-cash-is-letting-som... https://techcrunch.com/2018/01/31/square-cash-expands-bitcoin-buying-and-selling-to-all-users/ https://techcrunch.com/2018/01/31/square-cash-expands-bitcoi...

deltateam 8y ago
Odd feeling when your state has the same restrictions as countries on the OFAC list.
- microcolonel 8y ago
  Sometimes it feels like NY will pass and keep almost any law, as long as it hurts somebody who has no powerful friends.
  - deltateam 8y ago
    your observation does not lack accuracy

yebyen 8y ago

Apparently according to TFA this is the ninth such license that was awarded? Wikipedia page needs an update, they still only list the first five: https://en.wikipedia.org/wiki/BitLicense https://en.wikipedia.org/wiki/BitLicense (I was only aware of the one that I knew Coinbase held.)

otoburb 8y ago
Somebody just updated it[1], ironically from NY state. [1] https://en.wikipedia.org/w/index.php?title=BitLicense&action=history https://en.wikipedia.org/w/index.php?title=BitLicense&action...
- yebyen 8y ago
  I wonder how Reuters got all the way up to nine! > With the Square approval, DFS has now approved nine firms for virtual currency charters or licenses, while denying those applications that did not meet DFS’s standards. DFS has also granted licenses to Xapo, Inc., Genesis Global Trading Inc., bitFlyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company and Paxos (formerly itBit Trust Company). from the Wiki citation [21] https://www.dfs.ny.gov/about/press/pr1806181.htm https://www.dfs.ny.gov/about/press/pr1806181.htm looks like two are charters, not sure how that's different than a full BitLicense.

asdsa5325 8y ago

It's a shame that Square is getting caught up in this scam. It makes me no longer want to do business with them.

deltateam 8y ago
Square is a payment processor and all payment processors are presented with an opportunity to use existing blockchains as the rails for a cheaper money transmission system. Blockchain networks have the capability to be cheaper than the offerings of the SWIFT system, ACH and VISA networks, for the payment processor. Given the state of the technology today, taking advantage of these cost savings in the most network-aligned way requires massive liquidity. Square creating a liquidity solution helps them and grants their customers something they want.
- glitchc 8y ago
  I'm not buying the cheaper argument. Which part of transacting on the Bitcoin network is cheaper exactly? Mining is cost-intensive, and transaction fees are at least an order of magnitude higher than Visa. Equating SWIFT to Visa is also disingenuous as the former is meant for cross border settlements where the restrictions are regulatory (AML), not technology. Switching to Bitcoin doesn't mean Square or any other institution can simply ignore AML laws. I see this mainly as a service they wish to provide to a segment of their customer. I also expect it to be a loss leader and shut down over time.
  - dick_sucker2 8y ago
    No chargebacks?
    - glitchc 8y ago
      Is that meant as a positive or a negative, as chargebacks help the consumer, as does non-repudiation. The general public wants these features in our exchange mediums.

glitchc 8y ago

How are they going to handle this? Will they be holding coins a la an exchange or will they host multiple full nodes and post txes to the chain?

m3kw9 8y ago

I feel like these higher profile cryptocurrency projects are just still following thru because they’ve been approved at the peak of its hype and fully funded back then.

clarkmoody 8y ago
I think Jack Dorsey's interest in Bitcoin goes a little beyond the current hype cycle. [1] https://www.ccn.com/i-hope-bitcoin-will-be-internets-native-currency-twitter-ceo-jack-dorsey/ https://www.ccn.com/i-hope-bitcoin-will-be-internets-native-...
DINKDINK 8y ago
The ICO-scam mania is waining, systems that run those ICOs are cooling (Ethereum), but the need for a system of sound, programmable money remains. This is why Square is pursuing Bitcoin.
- deleted 8y ago
  [deleted]
- kartan 8y ago
  > the need for a system of sound, programmable money remains I understand that the original goal was to have the value of the currency to be not controlled by a central bank. Is there any other benefit to it? What does it mean that the currency needs to be "programmable" in this context?
  - DINKDINK 8y ago
    Programmable money means that I can download a bitcoin contract that functions as a will without having to pay a lawyer or live in a country with a robust legal system to ensure that: after 180 days of me not moving my funds, my heirs get it, etc See https://bitcointechtalk.com/what-is-a-bitcoin-merklized-abstract-syntax-tree-mast-33fdf2da5e2f https://bitcointechtalk.com/what-is-a-bitcoin-merklized-abst...
    - 8y ago

benarent 8y ago

One interesting product decision with Square Cash and Robinhood Crypto services is that customers can't transfer off as BTC ( to another exchange / hardware wallet) . When I asked Robinhood they said it was so customers didn't user BTC for illegal activity as they hadn't built out specific anti-money laundering measures.

dawhizkid 8y ago
I don't think that is true for Square Cash. I can withdraw to a different address off Square - I needed to verify by DL first though.
- pcmonk 8y ago
  That's correct, you can transfer off Cash app. However, you can't deposit BTC to your Cash app.
- benarent 8y ago
  Yeah. I found it. https://squareup.com/help/us/en/article/6307 https://squareup.com/help/us/en/article/6307 The menu is pretty hidden.

zitterbewegung 8y ago

I thought that the sentiment at Square was hostile to cryptocurrencies . They stopped accepting bitcoin and also patio11 was skeptical about cryptocurrencies but those views could have been his.

simonk 8y ago
patio11 works for Stripe not Square
paulie_a 8y ago
They stopped accepting bitcoin for good reason, not hostility. Why would anyone ever want to pay in bitcoin with the massive transaction fees.
- yebyen 8y ago
  It has gotten better (I actually am of the impression that the transaction volume has gone down, and that's largely to credit for the fact that fees are back down, perhaps because of Lightning and/or Segwit; but regardless of the reason why, there is nobody left who is paying $15-30 in fees for each BTC transaction on the chain today) This great visualization[1] showed up on my feed yesterday, you can see that most of the BTC transactions' fees are being measured in single-digit USD cents again. It compares BTC to BCH, and you have to wait a while to see what's happening, but I think it's a fairly unbiased and basically informative view of how the two on-chain transaction scaling strategies actually work. (Spoiler: the number of BTC transactions is still massively outpacing the number of BCH transactions, in case you didn't guess that.) [1]: https://bitcoinsubway.cash/ https://bitcoinsubway.cash/ [edit: http_s_]
  - paulie_a 8y ago
    What has changed in the past 3 months? A co-worker of mine decided to throw a few bucks into the crypto craze and the fees were about the same as what he wanted to buy.
    - 8y ago

SilasX 8y ago

Wow, "BitLicense" cryptocurrency licenses (in NY) are thing now: https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_fram...

yebyen 8y ago
I would never have become a Coinbase user except for all of the press when they got theirs, while I was living in NY. Centralized exchanges are not really my thing, but legal compliance is pretty alright by me, and NY is a notoriously difficult regulatory climate. When I heard that Coinbase might be sending my information to the IRS, it was actually a relief. (Given: I have managed to make not very much on crypto for someone who has been involved in the ecosystem for a while.)
TaylorGood 8y ago
There is a "crypto" documentary on Netflix which goes into detail about how this came to be. Spoiler: the sanctioning board have basically all left Gov't to consult privately on best practices to getting the license.

spunker540 8y ago

I think Square has a huge incentive for cryptocurrencies to catch on because almost all their payments and hardware incur credit card fees, licensing fees etc. Not to mention complex and outdated settling mechanisms.

just_one_time_ 8y ago
Yes, why is it mostly Bitcoin users pushing for acceptance rather than merchants and payment processors pushing for adoption makes no sense.

adsfgionioni 8y ago

This is a strange situation. Bitcoin is useless at the moment because no one accepts it. But the fees are low, so there is a real incentive to start using it instead of things like credit cards. Let's imagine that a lot of big companies, like Square, start using Bitcoin. Then the network would get saturated (since it doesn't scale) and Bitcoin would become unusably slow and expensive. Bitcoin is useless if it's on the fringe, but it's equally useless if it's widely used. If it's too popular there's an incentive to stop using it, and if it's too unpopular there's an incentive to start. Is there a stable equilibrium where it has some utility? I don't know. A project like this can only succeed if it doesn't succeed too much. Square is big enough that it could single-handedly saturate the Bitcoin network, and I don't know what they'd do then.

ericnyamu12345 8y ago

wow.check out this cool forum http://mawazo.byethost7.com/index.php http://mawazo.byethost7.com/index.php

BloodyHands 8y ago

> New York State legalizes a scam news at 11