Fintech bank Nubank recently made the decision to suspend trading for its cryptocurrency, Nucoin. This move comes amidst concerns surrounding the financial stability of the bank. The announcement was made in a blog post on September 10, where Nubank revealed that Nucoin would no longer be available for purchase or sale within its app.
Originally launched in late 2022 on the Polygon blockchain as part of a reward program, Nucoin will now have a new purpose within the Nubank ecosystem. Instead of being traded on the market, Nucoins will serve as assets that can unlock benefits and rewards for users. These perks include discounts at Nubank Shopping and advantages in various experiences sponsored by the bank.
While the exact reasons for suspending Nucoin trading are not fully disclosed, the move is widely speculated to have been made to prevent potential fluctuations in the cryptocurrency’s value. This decision comes at a time when Nubank is under scrutiny for its financial health, particularly regarding an increase in non-performing loans and concerns about asset quality.
Bloomberg reported that Nubank’s stock has seen a significant increase of over 60% this year. Despite this, some analysts have raised doubts about the bank’s valuation, with concerns about non-performing loans becoming a focal point. Nubank’s non-performing loans, which are overdue by 90 days or more, hit a record 7% in the second quarter, surpassing the industry average of 5.5%.
In response to these concerns, firms like JPMorgan Chase and UBS downgraded their ratings for Nubank to “neutral” in July, citing a decline in asset quality. The decision by Persevera Asset Management to sell off its entire position in the bank further highlights the unease in the market regarding Nubank’s financial stability.
While facing criticism from analysts and investors, 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. Despite the challenges, Nubank remains committed to navigating through the scrutiny and maintaining its position in the fintech industry.
Leave a Reply