From decrypt by Adrian Zmudzinski

Source: Shutterstock

Cash App—the payment application jumpstarted by Twitter founder Jack Dorsey—has ended its support for free peer-to-peer (P2P) Bitcoin payments.

“Cash App will no longer support sending and receiving Bitcoin between $cashtags,” starting on Dec. 20, a recent announcement reads. However, customers outside of New York can still use Lightning Network to receive or send Bitcoin.

Furthermore, “Bitcoin Gifts will also still be available,” the company said. The changes only involve Bitcoin support, with transfers made in fiat currency not being affected.

A Cash App spokesperson told Decrypt that the decision was taken “to focus our internal resources on the products and services that Bitcoin holders on the app use and value most.” The company representative also claimed that the firm remains “committed to building innovative, accessible products for customers who use Bitcoin.”

Cash App was launched in 2013 under its original name Square. It started as a P2P payment system similar to PayPal’s Venmo. Since then, it has expanded to support Bitcoin transfers and acquisitions, stock investments, savings, lending, and pre-paid Visa cards.

While the company does not share the statistics of Bitcoin usage on the platform, its regulatory filings show that Bitcoin support is making money for Cash App. Documents show that in Q4 2023 the firm generated over $65 million in Bitcoin gross profit—an increase of about 90% compared to Q4 2022.

Late February reports showed that the Block Inc. app saw “the total sale amount of Bitcoin sold to customers—which we recognize as Bitcoin revenue—was $2.52 billion, up 37% year over year.” BusinessDasher data shows that the payment super-app currently has over 57 million active users on its platform.

  The internal changes follow May reports that Cash App’s features prompted United States federal prosecutors to investigate its compliance practices. Internal documents purportedly admitted that “due to the nature of the product,” its customers “do not appear to leave stored balances in Cash App very long,” leading to limited “ability to block a stored balance or reject funds.”

“In virtually all situations, balances have been depleted by the time of review,” the company highlighted.

The report also noted that Cash App was involved in small transactions involving sanctioned countries, including Russia, Iran, Cuba, and Venezuela. The report follows the United States Justice Department investigating leading crypto exchange Binance for possible Russian sanctions violations in May.