Digital payments processing company Square announced that it total worth $34.1 million in the first quarter of 2018. The announcement was made May 3, 2018, by the company during the filing of its quarterly results, as is mandatory by the Securities and Exchange Commission (SEC).
Disappointing Numbers
Analysts, however, are far from happy with Square’s performance. Square, founded in 2009, is led by the co-founder of Twitter, Jack Dorsey, as its CEO. While the company reported a net sale of worth $34.1 million, it also spent over $33.9 million to facilitate bitcoin trading through its mobile payments app.
The report clearly highlights that the company made a meager revenue of $200,000 from its bitcoin trading operation. Chief Financial Officer of Square, Sarah Friar, addressed the wafer-thin revenue by , “It’s effectively a margin that we’re putting in place to give us some cushion for when a customer makes purchases, and we have to go into the market to buy the bitcoin.” She added that this was necessary to prevent any price fluctuations between USD and BTC.
In the previous quarter, trading contributed only a minimal percentage of the company’s total revenue which amounted to around $699 million. Investors were, however, optimistic of improved earnings which would give a boost to future investment sentiment across Wall Street.
BTIG Analyst Mark Palmer :
“In as much as Square’s stock performance in recent months has been bolstered by enthusiasm surrounding the bitcoin effort, the actual financial impact of the cryptocurrency on the company’s results provided a window into how little such transactions may move the needle for the company.”
Stock Tumbles Six Percent after Results
Shares of Square Financials took a six percent tumble in the extended trading hours after the report was released on May 3. Despite the company earnings per share (EPS) expectations and beating revenue expectations, its guidance fell short of analyst expectations.
Profit at Cryptocurrency Exchanges
have from a high interest shown by masses in owning bitcoin and other . Investors generally view cryptocurrencies as an investment even though most digital tokens do not have any utility yet.
Bloomberg that the top cryptocurrency exchanges make as much as $3 million from trading fees every day. Binance and Upbit have projected daily revenues upwards of $3 million while Huobi and Bitrex make more than $2 million daily. It is also no surprise that Asia-based exchanges are at the top of the list as early took advantage of both, cheap and abundant electricity available in the region as well as the favorable cryptocurrency environments in South Korea, Japan, and China.
Since then, however, South Korea and China have both tightened financial regulations on bitcoin and cryptocurrency exchanges while the on cryptocurrency trading and other activities altogether.
Speaking about the revenues of major cryptocurrency exchanges, Gil Luria, equity analyst at D.A. Davidson and Co. said:
“The exchanges and transaction processors are the biggest winners in the space because they’re allowing people to transact and participate in this burgeoning sector. There’s a big business there and it would not surprise me if they’re making hundreds of millions of dollars in revenue and possibly even billions a year.”
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After every rain comes sunshine; this is precisely the case in the South Korean cryptosphere’ as the dark clouds of regulatory uncertainties surrounding the Asian nation’s blockchain-based digital currencies are gradually fading away. Now, lawmakers in South Korea are putting preparations in top gear to enact a law that makes initial coin offerings a legal activity in the country.
Better Days Ahead for ICOs
Per , a group of legal luminaries in the nation has joined forces in a bid to lift the embargo placed on organizing new initial coin offerings in South Korea.
The ten-man team led by a reputable member of the ruling Democratic party, Rep. Hong Eui-rak, is determined to formulate a bill that will see to the legalization of ICO projects and get it endorsed by the end of 2018.
Speaking at an ICO conference held at the National Assembly on May 2, 2018, the lawmaker reiterated that:
“The bill is aimed at legalizing ICOs under the government’s supervision,” adding “The primary goal [of the legislation]is helping remove uncertainties facing blockchain-related businesses .”
Not Birds of the Same Feather
On September 4, 2017, the then cryptocurrency capital of the world, China through the global crypto space into a state of severe FUD (fear uncertainty and doubt) by placing an on initial coin offerings and trading of ICO-generated tokens.
Unsurprisingly, the South Korean authorities followed in the steps of China and placed a blanket on ICOs towards the end of September 2017.
However, in March this year, the government looking towards allowing ICO schemes to function under some defined conditions which include the regulators having unrestricted access to data on capital inflows from both individual investors and retail traders into the ICO industry.
A top Korean government official told Korea Times earlier in March 2018:
“The financial authorities have been talking to the country’s tax agency, justice ministry, and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met.”
Cryptos for the Good of All
The creators of the bill have however stated categorically that they are only working to ensure unfavorable regulation does not stifle credible organized by public organizations and research bodies that aim at promoting the growth and development of the distributed ledger technology.
Additionally, the bill states that regulatory authorities including the Financial Services Commission, and the Ministry of Science and ICT will closely monitor these ICO projects.
The Speaker of the South Korean National Assembly, Chung Sye-kyun further emphasized the aim of the bill by saying that:
“Blockchain and cryptos can be used in various public sectors for good causes. Given their potential, we need to work to help reduce political uncertainties they face.”
Slow and steady, the entire industry is beginning to get regulated. In the coming months, it won’t be surprising to see the prices of digital currencies like bitcoin and the altcoins making new all-time-highs.
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