Square Inc., a payments company, founded and run by Twitter CEO Jack Dorsey, is reportedly withdrawing its application for a bank license. The banking license was part of the firm’s push to grow into a financial institution that could compete with established lenders.
The San Francisco-based company had applied with state regulators in Utah and the US Federal Deposit Insurance Corp in September 2017 for a bank charter so that it could offer deposit accounts. The move immediately sparked immense controversy as it marks the first entrance of a cryptocurrency-friendly firm into traditional banking.
A Square spokesperson told American Banker yesterday that the company, which more than doubled in value last year, plans to refile after it bolsters its application.
“We have been engaged in constructive dialogue with the FDIC, and our decision to withdraw and refile was a procedural step in the review process that will allow us to amend and strengthen some areas of our FDIC insurance application,” added the spokesperson.
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Last month, Square was granted a so-called BitLicense by the New York State Department of Financial Services (NYDFS), becoming only the ninth such firm to win approval to operate in the state. It now legally operates as a money transmitter and digital currency exchange.
The news follows other, similar stories of progress for Bitcoin companies in the US, though cryptocurrency regulation still happens largely on a state-by-state basis.
To maintain a BitLicense license, a provider must fulfill various reporting requirements and comply with standards on anti-money laundering, cybersecurity, and consumer protection.
San Francisco-based Square had jumped on the cryptocurrency bandwagon back in January when it rolled out Bitcoin trading to its Cash App customers.
Square founder and CEO Jack Dorsey has repeatedly shared his enthusiasm for digital currencies, saying it provides an “opportunity to get more people access to the financial system.” He also thinks bitcoin is a transformational technology and will be the world’s single currency in 10 years.