Fintech bank Nubank shocked the market by announcing the suspension of trading for its cryptocurrency, Nucoin. The decision, revealed in a blog post on September 10, stated that Nucoin can no longer be bought or sold within the bank’s app. Originally launched in late 2022 on the Polygon blockchain, Nucoin was designed as part of a reward program to provide users with perks. However, it will now only serve as an asset to unlock benefits and rewards within the bank’s ecosystem.
The exact reasons for the suspension remain unclear, but it comes at a time when Nubank is facing increasing scrutiny over its financial stability. There are concerns about rising non-performing loans and the quality of its assets. Despite Nubank’s stock surging by over 60% this year, some analysts have labeled it as “overvalued.” Notably, the bank’s non-performing loans, overdue by 90 days or more, reached a record 7% in the second quarter, exceeding the industry average of 5.5%. Meanwhile, the bank reduced its bad debt provisions, causing further concerns among investors.
The decision to suspend trading of Nucoin has had a significant impact on Nubank’s reputation in the market. Investor confidence has waned, leading to downgrades by major financial institutions like JPMorgan Chase and UBS, who now rate Nubank as “neutral.” Additionally, Persevera Asset Management sold off its entire position in the bank, citing concerns over credit quality. The decision to suspend Nucoin trading has raised questions about the bank’s long-term financial health and whether it can weather the storm of growing non-performing loans.
Despite the criticisms and concerns raised by analysts and investors, Nubank’s executives remain steadfast in their stance. Chief Operating Officer Youssef Lahrech defended the bank’s lending practices during an earnings call, emphasizing that the bank prioritizes long-term strategies over short-term non-performing loan metrics. However, the market remains skeptical, and Nubank will need to address these issues head-on to regain investor trust and confidence.
The suspension of Nucoin trading marks a pivotal moment for Nubank as it navigates challenges to its financial stability. The bank’s reputation hangs in the balance, and how it addresses these issues will determine its future success in the ever-evolving fintech industry.