What's going on?

Square reported better-than-expected quarterly earnings late last week, as cryptocurrencies brought the payments provider the inner peace it�s been longing for.

What does this mean?

Square�s sales more than tripled last quarter, surpassing analysts� estimates by around 50%. That jump was mostly thanks to brisk bitcoin trading on its Cash App: the company adds a fee whenever users buy or sell crypto, and those charges came to 1,100% more than the same time last year.

Still, Square isn�t greedy: it made just $75 million in profit from $3.5 billion of crypto-related revenue. Maybe the company�s simply sharing some goodwill, having announced in February that it�d invested around $170 million in bitcoin. But there might also be an ulterior motive. With rival PayPal hoping its own nascent crypto platform becomes a major source of growth, Square�s low margins could be cannily competitive. Investors certainly seem to think so: they sent Square�s shares up 6% on Friday.

Why should I care?

The bigger picture: Wall Street wants in.
A slew of recent announcements reveal just how keen traditional financial firms are on grabbing a slice of the crypto action. Besides Goldman Sachs� unveiling of a new dedicated trading team, rival BNY Mellon is vying to administer the US�s first bitcoin exchange-traded fund. One high-profile venture capital firm, meanwhile, is looking to follow its successful backing of Coinbase by raising a fresh $1 billion fund to invest in a few more crypto plays.

For markets: The Fed is not amused.
Investors� appetite for risk-taking has pushed up the prices of everything from cryptocurrencies to junk bonds. But the US central bank isn�t celebrating: the Federal Reserve is concerned that many parts of the market are unsustainably elevated, and that this � combined with nosebleed-inducing levels of company debt � could pose a risk to the US financial system. Better pack it in and head to Bali�