Brazil’s Nubank Suspends Trading of its Cryptocurrency Nucoin

Fintech financial institution Nubank has introduced the suspension of buying and selling for its cryptocurrency, Nucoin.

This comes in opposition to a backdrop of scrutiny over the financial institution’s monetary stability.

Nubank’s Coverage Change

In a September 10 weblog submit, Nubank disclosed that efficient instantly, Nucoin can not be purchased or bought inside its app. The cryptocurrency was launched in late 2022 on the Polygon blockchain as a part of a reward program designed to offer customers with numerous perks.

It’s going to now serve completely as an asset to unlock advantages and rewards inside its ecosystem. This contains reductions at Nubank Buying and benefits in numerous experiences promoted by the financial institution.

“We’ve got determined to droop buying and selling instantly to keep away from attainable fluctuations within the worth of Nucoins available on the market,” acknowledged the submit.

The financial institution added that clients will retain the choice to redeem their Nucoins for Bitcoin or digital {dollars} (USDC) till December 9, 2024. Nubank may also maintain raffles with prizes as much as R$1 million for individuals who select to redeem their cash.

The precise causes for the choice stay unclear, however the abrupt coverage change comes because the financial institution faces scrutiny concerning its monetary well being, together with rising issues about rising non-performing loans and the standard of its belongings.

Rising Non-Performing Loans and Asset High quality

In response to a Bloomberg report, regardless of the corporate’s inventory surging by over 60% this yr, some analysts have expressed reservations, labeling it as “overvalued.”

It highlights that Nubank’s non-performing loans, overdue by 90 days or extra, hit a file 7% within the second quarter, exceeding the 5.5% business common. On the similar time, the financial institution lowered its unhealthy debt provisions from $831 million to $760 million.

Fernando Fontoura, a portfolio supervisor at Persevera Asset Administration, stated these issues over credit score high quality led the agency to distance itself from it.

In June, Persevera bought off its total place within the financial institution, describing it as “crowded.” Moreover, each JPMorgan Chase and UBS downgraded their scores for Nubank to “impartial” in July, citing deteriorating asset high quality.

The agency’s executives, nonetheless, have defended its lending practices. Chief Working Officer Youssef Lahrech defined throughout an earnings name that the financial institution prioritizes long-term methods over short-term non-performing mortgage metrics.

Its press workplace additionally countered the report, stating that the issues raised don’t mirror the general sentiment on Wall Avenue. They clarified that the information cited within the report, primarily based on Brazilian Central Financial institution figures, makes use of a unique methodology for loss provisions in comparison with Nubank’s strategy.