Buffett-backed digital bank Nubank to launch its own cryptocurrency – Reuters

The Brazilian digital banking startup Nubank will launch its own cryptocurrency in the country next year, marking the latest move into digital assets by a major financial institution.

Nubank announced on Wednesday that it would launch the token, called Nucoin, in the first half of 2023. In a press release, the company touts Nucoin as “a new way to recognize customer loyalty and encourage engagement with products. Nubank”. Nubank said it plans to offer discounts and other benefits to token holders.

“The project is another step in our belief in the transformative potential of blockchain technology and to democratize it even further, going beyond the buying, selling and servicing of cryptocurrencies in the Nu application,” Fernando Czapski, managing director of Nucoin at Nubank, said in a statement.

Nubank said it would invite 2,000 customers to participate in a forum group to guide the development of Nucoin, “adhering to common practices in blockchain projects,” according to the company. “In this phase, more than feedback, the proposal is to explore a decentralized product creation process, characteristic of Web3,” Nubank said.

The cryptocurrency was built on the Polygon network, a so-called “Layer 2” protocol that aims to reduce congestion on the Ethereum blockchain, where transactions can often be expensive and time-consuming to process. Polygon claims that its platform is capable of supporting thousands of transactions per second.

Nubank is not the first bank to launch its own cryptocurrency. JPMorgan has rolled out its own token, JPMCoin, a so-called stablecoin that maintains a one-to-one parity with the US dollar. Unlike this coin, the price of Nucoin fluctuates in value based on supply and demand, as coins like bitcoins and ether.

It follows further steps from banking and payment companies to the crypto market. In October, Mastercard launched a new tool, Crypto Secure, aimed at helping card issuers prevent fraud involving crypto exchanges. Companies like PayPal and Robin Hood also offer cryptocurrency trading. The Bank of Wall Street Goldman Sachsmeanwhile, has its own in-house crypto trading desk.

The new token offering comes against a bleak backdrop for cryptocurrencies. The market is currently experiencing a deep recession that investors are calling “crypto winter”, with many digital coins – including the world’s largest, bitcoin – having lost more than half of their value since the start of 2022.

Since then, regulators have become more wary of digital currencies and the potential harm they pose to consumers, with governments in the United States, European Union and elsewhere introducing regulatory frameworks for the ‘industry.

Asked if Nubank had sought regulatory approval in Brazil before launching its token, a spokesperson for the company said it “constantly assesses the regulatory framework as an important part of our product development process”.

Nubank was launched in 2013 with a purple no-fee credit card in Sao Paulo, Brazil, a country known for its high-fee, low-tech banking system. Since its launch nine years ago, the company has 70 million users in Brazil, Mexico and Colombia.

Nubank, which went public late last year, counts famed investor Warren Buffett among its list of backers. Buffett’s company, Berkshire Hathaway, took a $500 million stake in Nubank in June 2021. The company is valued by the stock market at $20.4 billion, about half of what it was worth at the time. its debut in December 2021.

Nubank has already gotten into the crypto game through its Nucripto platform, which offers to exchange a range of tokens including bitcoin and ether. The exchange, which is powered by technology from blockchain infrastructure startup Paxos, hit 1 million users in July a month after its launch.

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Buffett-backed digital bank Nubank to launch its own cryptocurrency – Reuters


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