Square’s Bitcoin Service Powered by Private Brokers

More professional and secure service

A recent regulatory filing shows that Square (SQ) offers its bitcoin trading service through private brokers rather than public cryptocurrency exchanges. Working with private brokers instead of public exchanges may help Square minimize risks in its bitcoin trading business, particularly by ensuring more predictable bitcoin prices.

Partnering with private brokers may also make Square’s bitcoin trading service look more professional and secure, which may, in turn, help the company attract more traders to its platform.

Square’s Bitcoin Service Powered by Private Brokers

Bitcoin revenue doubles in three months

Square offers its bitcoin trading service through Cash app. It launched bitcoin trading trials in 2017 and rolled out the service broadly earlier this year.

Square’s bitcoin trading service generated $37 million in revenue and produced a profit of $400,000 in the second quarter. Its revenue and profit both increased sequentially. Square made a $200,000 profit on revenue of $34 million from its bitcoin business in the first quarter. That shows Square’s bitcoin revenue doubled in three months.

Some companies have shied away from crypto products

Square has embraced bitcoin at a time when many large tech companies have tried to minimize their exposure to cryptocurrencies. Facebook (FB), Google (GOOGL), and Twitter (TWTR) have restricted advertising of crypto products on their platforms, saying the restrictions are designed to protect their users from potential fraud.

Despite competing with Square in many areas, PayPal (PYPL) has been reluctant to get deeply involved with crypto products.