Payment processing company Square reached an all-time high market cap after obtaining the Bitlicense from the New York Department of Financial Services (NYDFS) to operate as a cryptocurrency platform.
Square’s founder is Jack Dorsey, the CEO of Twitter, who notably has professed his beliefs that Bitcoin will soon become the world’s single currency. His belief in the future of cryptocurrency, and Square’s movements into the markets, have led to a much higher market cap for the company. Square’s stock surged three percent after the company announced it had received its Bitlicense. At the time of writing, Square’s market cap was $26.19 billion.
New York State has the strictest regulation surrounding the sale of cryptocurrencies. The department first released details surrounding a proposed Bitlicense in July of 2014. The proposed license would place regulations on any person or individual residing in New York that uses cryptocurrencies. After coming into effect in August of 2015, New York lost the business of at least 10 cryptocurrency companies.
Boston based Circle was the first company to be granted a Bitlicense, although the company has since shifted its focus away from its cryptocurrency exchange. The existence of a Bitlicense is controversial, and the legality of it has been challenged in New York courts, but the case was ultimately dismissed by a judge.
By receiving a Bitlicense, Square is joining other major cryptocurrency companies like Ripple, Coinbase, bitFlyer, and Xapo.
Square’s movement into the cryptocurrency markets has been met with mixed receptions. CNBC Mad Money’s host, Jim Cramer, notably said that he feels Square should rely more on their core business rather than their cryptocurrency ventures.
“Not once, but twice in the last four months, this stock has been hit with fierce declines. Both times it seemed like the beginning of the end for Square, and both times the stock managed to turn things around, coming back with a vengeance. To me, this is a ridiculous linkage. Square has enough going for it that it doesn’t need this tenuous connection to cryptocurrencies to power its stock to new highs. I think the best thing they could do would be to figure out a way to decouple from Bitcoin, which is incredibly volatile and really has very little to do with the core business,” Cramer said.
Clearly, investors disagree with this assessment, with all news of Square’s cryptocurrency ventures being met with rises in their stock price.