Nubank, a fintech bank, has recently made the decision to suspend trading for its cryptocurrency, Nucoin. The announcement came amidst concerns over the bank’s financial stability and the validity of its assets. Nucoin was introduced in late 2022 on the Polygon blockchain as part of a reward program aimed at providing users with various benefits and perks. However, as of September 10, users can no longer buy or sell Nucoin within Nubank’s app.
The blog post from Nubank stated that the decision to suspend Nucoin trading was made in order to prevent potential fluctuations in the cryptocurrency’s value on the market. Customers are still able to redeem their Nucoins for Bitcoin or digital dollars (USDC) until December 9, 2024. Additionally, Nubank plans to hold raffles with prizes up to R$1 million for those who choose to redeem their coins. The exact motives behind the suspension remain unclear, but it coincides with mounting concerns about Nubank’s financial health.
Despite Nubank’s stock seeing a significant increase of over 60% this year, analysts have raised doubts about the bank’s valuation. Non-performing loans, which are overdue by 90 days or more, reached a record high of 7% in the second quarter, surpassing the industry average of 5.5%. At the same time, Nubank reduced its bad debt provisions, causing further unease among investors. This prompted Persevera Asset Management to divest from Nubank entirely in June, citing concerns over credit quality.
JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral” in July, citing a decline in asset quality as the reason. Despite these setbacks, Nubank’s executives have stood by their lending practices. Chief Operating Officer Youssef Lahrech emphasized during an earnings call that the bank prioritizes long-term strategies over short-term non-performing loan metrics. However, with the increasing scrutiny and doubt surrounding Nubank, the future of the bank’s cryptocurrency, Nucoin, remains uncertain.
Nubank’s decision to suspend trading for Nucoin is a significant development that sheds light on the broader challenges facing the bank. With concerns over financial stability and asset quality mounting, Nubank will need to navigate these turbulent waters carefully to maintain the trust and confidence of its customers and investors alike.
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