Nubank, one of the largest crypto banks in Latin America and backed by Warren Buffet’s Berkshire Hathaway, has suspended trading of its native cryptocurrency, Nucoin, effective immediately. This decision follows a dramatic 97% decrease in the token’s value over the past year.
Nubank’s Journey with Nucoin
Nubank ventured into the cryptocurrency space by launching Nucoin on the Polygon blockchain on October 19, 2022. However, nearly two years later, the bank has decided to cease trading of the token. In response to the decline, Nubank has offered its customers the option to convert their Nucoin holdings into Bitcoin or the stablecoin USDC by December 9. If customers do not convert their tokens by this deadline, their holdings will be retained for accumulation within the bank’s rewards program.
Nubank communicated to its customers via email that the immediate suspension of Nucoin trading was to protect them from potential market volatility following the announcement. The last recorded trading price of Nucoin was $0.0158, a steep fall from its all-time high of $0.59 on April 22, according to CoinMarketCap data.
Since introducing cryptocurrency services in May 2022, Nubank has actively expanded its offerings. Initially, the bank allocated 1% of its net assets to Bitcoin and formed a partnership with Paxos to facilitate cryptocurrency transactions for its customers. As of November 22, Nubank reported serving over 100 million customers across Brazil, Mexico, and Colombia, offering 14 different cryptocurrencies in addition to Nucoin.
Cryptocurrency Adoption in Latin America
The backdrop to Nubank’s activities in the cryptocurrency market is a broader trend of increasing crypto adoption in Latin America, particularly in Argentina. Analysts attribute this rise to high inflation rates and a general distrust in traditional banking systems. A Forbes report in July highlighted Argentina’s significant engagement with cryptocurrency, with 2.5 million out of 130 million global visitors to major exchanges coming from the country.
During a panel at Web Summit Qatar on February 27, Juan Pablo Ortega, co-founder and CEO of the online payment platform Yuno, spoke about the financial inclusion revolution being driven by fintech firms in Latin America, Asia, and parts of Africa. He noted that while there is profound distrust towards banks in places like Argentina, prompting locals to prefer physical cash for large transactions, regulatory changes and efforts by companies are crucial for true financial inclusion.
Nubank’s suspension of Nucoin trading reflects the volatile nature of the cryptocurrency market and underscores the challenges that institutions face in integrating digital currencies into mainstream financial services. As the bank navigates these challenges, it continues to play a significant role in the evolving landscape of financial technology and cryptocurrency in Latin America. The developments at Nubank and the broader trends in the region illustrate the dynamic interplay between technology, regulation, and market forces in shaping the future of finance.
Featured image credit: Engin Akyurt via Pexels
Follow us for more breaking news on DMR