Square Inc (NYSE: SQ) is the latest company to dip its toes into the red-hot cryptocurrency market, but not everyone is welcoming the company’s newest innovation.
CEO Jack Dorsey says that almost all Square Cash users can now buy and sell bitcoin directly from the app. Square began offering bitcoin trading to a limited number of Square Cash users in November, but now all U.S. users outside of the states of New York, Georgia, Wyoming and Hawaii can access the popular cryptocurrency.
“We support bitcoin because we see it as a long-term path towards greater financial access for all,” Dorsey tweeted on Wednesday. “This is a small step.”
For now, users can purchase up to $10,000 of bitcoin per week using Square Cash, but there is no limit to how much can be sold. Square’s announcement comes a week after stock-trading app Robinhood announced it will be launching free bitcoin and Ethereum trading services starting this month.
Square stock rose more than 3 percent on Dorsey’s announcement, but the stock began pulling back Thursday and was down nearly 2 percent in pre-market trading.
North American Securities Administrators Association president Joe Borg says Squareusers should think twice before buying bitcoin. “Cryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility,” Borg says. “Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart.”
While Square stock may be a less risky investment than bitcoin itself, BTIG analyst Mark Palmer says Square made a mistake by opening up its users to the volatile cryptocurrency market.
“It is not optimal from a risk standpoint for Square to have its fortunes tied to those of a cryptocurrency that has frequently displayed extreme volatility,” Palmer said in November, according to CNBC.
Palmer said bitcoin could provide only a “marginal contribution” to Square’s revenue if it maintains its popularity and the company begin charging fees on transactions.
Square said it will not be charging fees on bitcoin trades and prices will be determined by averaging the market price of bitcoin across other major exchanges.
After gaining more than 1,400 percent in 2017, bitcoin is off to a shaky start to 2018 thanks to a new wave of global regulations. The price of bitcoin has dropped…
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