Nubank to Launch 'Nucoin' Cryptocurrency in Brazil Next Year

Nubank, a digital banking company in Brazil, will become the next major financial institution to go into digital assets with the introduction of its own cryptocurrency in the country next year.

On Wednesday, Oct. 19, the company announced that the Nucoin token launch will occur in the first half of 2023. A new report via CNBC describes Nucoin as "a new way to recognize customer loyalty and encourage engagement with Nubank products."

Nubank has said token holders would be eligible for special pricing and other benefits.

For Fernando Czapski, general manager for Nucoin at Nubank, the initiative represents another step forward in the firm's conviction in the revolutionary potential of blockchain technology and to democratize it even more.

Brazil's New Cryptocurrency

To help guide the creation of Nucoin and ensure that it adheres to established principles in blockchain projects, Nubank has announced that it will invite 2,000 customers to participate in a discussion group. The idea is to study a decentralized method of product development, typical of Web3, rather than just relying on user input.

The Polygon network, a so-called "Layer 2" protocol, enabled the cryptocurrency. According to CNBC, its stated goal is to reduce transaction costs and processing times on the Ethereum blockchain, which have historically been significant drawbacks for the platform. Polygon claims that its platform can handle thousands of transactions per second.

The "Companies Entering Crypto Market" Trend

Regarding financial institutions, Nubank is not the pioneer in creating its own cryptocurrency. The token released by JPMorgan is called JPMCoin and is known as "stablecoins" valued at exactly $1 each. But unlike that, the value of Nucoin varies with supply and demand, much like the prices of cryptocurrencies like Bitcoin and Ether.

Nubank's new venture follows similar moves by other financial and payment institutions entering the cryptocurrency sector.

Crypto Secure, introduced by Mastercard in October, is designed to assist card issuers in avoiding fraud associated with crypto assets. PayPal and Robinhood are just two examples of companies that facilitate crypto trading. Similarly, Goldman Sachs, a major Wall Street bank, has its own dedicated crypto trading desk.

The Downside of the Increasing Number of Newly-Launched Tokens

For cryptocurrencies, the new token offering comes at the wrong time. Many digital currencies, including the biggest, Bitcoin, have lost nearly half their value since the beginning of 2022. Some are dubbing the current decline a "crypto winter."

Since then, regulators have become increasingly suspicious of digital currencies and the potential damages they represent to consumers. These prompt governments in the United States, the European Union, and others to develop frameworks for regulating the sector.

Background

Based on CNBC's report, in 2013, Nubank debuted a purple no-fee credit card in Sao Paulo, Brazil. The said city is known for its high-fee, low-tech banking system. After nine years, the company had 70 million Brazilian, Mexican, and Colombian users.

Last year, Warren Buffett invested in Nubank. In June 2021, Berkshire Hathaway invested $500 million, as well. The stock market valuation was $20.4 billion, half worth in its December 2021 launch.

Nubank formerly traded Bitcoin and Ether on its Nucripto platform. A month after debuting, this Paxos-powered exchange achieved 1 million customers.

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Written by Trisha Kae Andrada