Amidst growing concerns over its financial stability, Fintech bank Nubank has decided to suspend trading for its cryptocurrency, Nucoin. This unexpected move was announced on September 10 through a blog post, where Nubank revealed that Nucoin can no longer be bought or sold within its app. The cryptocurrency, which was introduced in late 2022 on the Polygon blockchain as part of a reward program, will now be exclusively used to unlock benefits and rewards within Nubank’s ecosystem.
The exact reasons for suspending Nucoin trading remain unclear, but speculations point towards the bank’s financial health. Reports indicate that Nubank is facing scrutiny over rising non-performing loans and the quality of its assets. Despite the company’s stock showing a significant surge of over 60% this year, some analysts have expressed concerns over its valuation. This is further highlighted by Nubank’s non-performing loans reaching a record 7% in the second quarter, surpassing the industry average of 5.5%.
Financial experts like Fernando Fontoura from Persevera Asset Management have cited worries about credit quality as a reason for the firm to distance itself from Nubank. In fact, Persevera went as far as selling off its entire position in the bank, describing it as “crowded.” Furthermore, JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral” in July due to deteriorating asset quality. Despite these downgrades, Nubank’s executives have defended their lending practices, emphasizing a focus on long-term strategies over short-term non-performing loan metrics.
To ease the transition for Nucoin holders, Nubank has offered customers the option to redeem their coins for Bitcoin or digital dollars (USDC) until December 9, 2024. Additionally, the bank has announced raffles with prizes up to R$1 million for those who choose to redeem their Nucoins. This move aims to provide some form of compensation and value to customers who have invested in Nucoin.
Nubank’s decision to suspend Nucoin trading signifies a tumultuous period for the Fintech bank. With concerns about its financial stability looming and the cryptocurrency facing an uncertain future, Nubank will need to navigate these challenges carefully to regain trust and confidence from both investors and customers alike.
