The Rise and Fall of Nucoin: Nubank’s Cryptocurrency Decision

Nubank, the Fintech bank, recently announced the suspension of trading for its cryptocurrency, Nucoin. This decision was made amidst concerns over the bank’s financial stability. The cryptocurrency was initially launched in late 2022 on the Polygon blockchain as part of a reward program aimed at providing users with various perks. However, with immediate effect, Nucoin can no longer be bought or sold within the Nubank app. Instead, it will only serve as an asset to unlock benefits and rewards within the Nubank ecosystem.

The exact reasons behind the suspension of Nucoin trading remain unclear. Nevertheless, the bank stated that the decision was made to prevent possible fluctuations in the value of Nucoins on the market. This move comes at a time when Nubank is under scrutiny for its financial health, including concerns about rising non-performing loans and the quality of its assets. Despite its stock surging by over 60% this year, some analysts have expressed doubts about Nubank’s valuation, labeling it as “overvalued.”

One of the key issues raised by analysts is Nubank’s non-performing loans, which exceeded the industry average in the second quarter. The bank’s non-performing loans, overdue by 90 days or more, reached a record 7%, while the industry average stood at 5.5%. In contrast, Nubank reduced its bad debt provisions during the same period. This discrepancy raised concerns about the bank’s credit quality, prompting some investors to distance themselves from Nubank.

Following these developments, notable financial institutions such as JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral.” They cited deteriorating asset quality as a primary reason for their decision. Despite these challenges, Nubank’s executives have defended the bank’s 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.

Nubank’s decision to suspend Nucoin trading reflects broader concerns about the bank’s financial stability. As the company navigates these challenges, it remains to be seen how Nubank will address the underlying issues and regain investor confidence in the long run.