Wayne Jones
Brazil’s Nubank Suspends Trading of its Cryptocurrency Nucoin
Fintech bank Nubank has announced the suspension of trading for its cryptocurrency, Nucoin.
This comes against a backdrop of scrutiny over the bank’s financial stability.
Nubank’s Policy Change
In a September 10 blog post, Nubank disclosed that effective immediately, Nucoin can no longer be bought or sold within its app. The cryptocurrency was launched in late 2022 on the Polygon blockchain as part of a reward program designed to provide users with various perks.
It will now serve exclusively as an asset to unlock benefits and rewards within its ecosystem. This includes discounts at Nubank Shopping and advantages in various experiences promoted by the bank.
“We have decided to suspend trading immediately to avoid possible fluctuations in the value of Nucoins on the market,” stated the post.
The bank added that customers will retain the option to redeem their Nucoins for Bitcoin or digital dollars (USDC) until December 9, 2024. Nubank will also hold raffles with prizes up to R$1 million for those who choose to redeem their coins.
The exact reasons for the decision remain unclear, but the abrupt policy change comes as the bank faces scrutiny regarding its financial health, including growing concerns about rising non-performing loans and the quality of its assets.
Rising Non-Performing Loans and Asset Quality
According to a Bloomberg report, despite the company’s stock surging by over 60% this year, some analysts have expressed reservations, labeling it as “overvalued.”
It highlights that Nubank’s non-performing loans, overdue by 90 days or more, hit a record 7% in the second quarter, exceeding the 5.5% industry average. At the same time, the bank reduced its bad debt provisions from $831 million to $760 million.
Fernando Fontoura, a portfolio manager at Persevera Asset Management, said these concerns over credit quality led the firm to distance itself from it.
In June, Persevera sold off its entire position in the bank, describing it as “crowded.” Additionally, both JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral” in July, citing deteriorating asset quality.
The firm’s executives, however, have defended its lending practices. Chief Operating Officer Youssef Lahrech explained during an earnings call that the bank prioritizes long-term strategies over short-term non-performing loan metrics.
Its press office also countered the report, stating that the concerns raised do not reflect the overall sentiment on Wall Street. They clarified that the data cited in the report, based on Brazilian Central Bank figures, uses a different methodology for loss provisions compared to Nubank’s approach.
The post Brazil’s Nubank Suspends Trading of its Cryptocurrency Nucoin appeared first on CryptoPotato.
+ There are no comments
Add yours