Brazil’s Nubank Suspends Buying and selling of its Cryptocurrency Nucoin

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

This comes towards a backdrop of scrutiny over the financial institution’s monetary stability.

Nubank’s Coverage Change

In a September 10 weblog publish, 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 would now serve completely as an asset to unlock advantages and rewards inside its ecosystem. This consists of reductions at Nubank Purchasing and benefits in numerous experiences promoted by the financial institution.

“Now we have determined to droop buying and selling instantly to keep away from potential fluctuations within the worth of Nucoins in the marketplace,” acknowledged the publish.

The financial institution added that prospects will retain the choice to redeem their Nucoins for Bitcoin or digital {dollars} (USDC) till December 9, 2024. Nubank can even maintain raffles with prizes as much as R$1 million for many 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 property.

Rising Non-Performing Loans and Asset High quality

Based on 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 document 7% within the second quarter, exceeding the 5.5% business common. On the identical time, the financial institution diminished its dangerous 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 whole place within the financial institution, describing it as “crowded.” Moreover, each JPMorgan Chase and UBS downgraded their rankings 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 Road. They clarified that the info 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 method.