Block Inc. is in discussions with the New York State Department of Financial Services (NYDFS) to resolve regulatory concerns regarding its Bitcoin operations and anti-money laundering (AML) programs.
According to its latest Form 10-K filing with the U.S. Securities and Exchange Commission (SEC), the parent company of Cash App and Square is negotiating with the NYDFS over its compliance framework, particularly regarding the Bank Secrecy Act (BSA) and Bitcoin-related activities. The outcome will determine whether a settlement can be reached on terms acceptable to both parties.
Block has faced increased regulatory scrutiny in recent years, including multiple investigations into its AML policies and tax compliance. Between January 2021 and March 2023, financial regulators across several U.S. states reviewed the company’s AML protocols and identified compliance deficiencies under the BSA.
In January 2024, Block reached a $80 million settlement with multiple state money transmission regulators, agreeing to appoint an independent consultant to oversee AML reforms. However, the NYDFS was not part of this agreement and has proposed its own separate settlement terms. While Block has set aside funds to address the issue, it stated in its SEC filing that the financial impact is not material to its overall financial performance.
The company also noted that it is cooperating with federal inquiries from the SEC and the Department of Justice (DOJ). These investigations stem from a March 2023 report that raised concerns about risk management and regulatory compliance. Block acknowledged that it cannot guarantee these investigations won’t materially impact its business.
Meanwhile, despite regulatory challenges, Block is doubling down on Bitcoin mining. In a November 2024 shareholder letter, the company announced plans to scale down its music streaming service, TIDAL, and wind down its decentralized web project, TBD, to focus on Bitcoin infrastructure. Through its Proto initiative, first announced in 2021, Block is expanding into mining hardware development.
In July 2024, Block partnered with Bitcoin miner Core Scientific to supply its new 3-nanometer (3nm) mining ASICs. The company has also launched a Mining Development Kit (MDK) Beta program, enabling builders and miners to collaborate on infrastructure for a decentralized mining sector.
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