Nubank, A Digital Bank Funded By Warren Buffett, Is Planning To Establish Its Own Cryptocurrency In Brazil

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Last Updated on October 19, 2022 by Bitfinsider

It will be the next step into digital assets by a significant financial institution when the Brazilian digital banking startup Nubank launches its own cryptocurrency in the country the following year.

On Wednesday, Nubank announced that it will release the token, which will be known as Nucoin, in the first half of 2023. The company describes Nucoin as “a new way to honor client loyalty and drive participation with Nubank products” in a press release that is made publically available online. Nubank has stated that it intends to provide token holders with discounts and other benefits in the future.

“The project is another step ahead in our belief in the transformative potential of blockchain technology and to democratize it even more,” Fernando Czapski, general manager for Nucoin at Nubank, said in a statement. “Going beyond the purchase, sale, and maintenance of cryptocurrencies in the Nu app,” the statement continued, “The project is another step ahead in our belief in the transformative potential of blockchain technology.”

According to Nubank, “adhering to common procedures in blockchain projects” means that the company will ask 2,000 of its customers to participate in a forum group that will be responsible for steering the development of Nucoin. “The proposal at this stage is to study a decentralized method of product creation, which is distinctive of Web3,” said Nubank. “This is more important than receiving comments.”

The coin was developed using the Polygon network, which is a so-called “Layer 2” protocol. Its purpose is to relieve congestion on the Ethereum blockchain, which is a distributed ledger that processes transactions and is known for its high fees and lengthy processing times. Polygon claims that its technology can support hundreds of transactions in a single second.

Nubank is not the first bank to develop its own cryptocurrency; this distinction belongs to another bank. JPMorgan launched its own own cryptocurrency, which it refers to as a “stablecoin.” This coin is pegged exactly to the value of one United States dollar. In contrast to that currency, the price of Nucoin is subject to market forces of supply and demand, just like other cryptocurrencies such as bitcoin and ether.

It is the next logical step for banks and payment institutions to take in entering the cryptocurrency sector. Crypto Secure is a new product that was released by Mastercard in October with the intention of assisting card issuers in preventing fraud involving cryptocurrency exchanges. Trading in cryptocurrency is also made available by companies such as PayPal and Robinhood. In the meantime, the Wall Street firm Goldman Sachs operates its very own internal trading desk for cryptocurrencies.

The latest token offering is taking place against the backdrop of a dismal environment for cryptocurrencies. Since the beginning of 2022, the market has been experiencing a significant decline that investors are dubbing a “crypto winter.” This is due to the fact that the value of numerous digital coins, including bitcoin, has dropped by more than half since the beginning of that year.

Since that time, regulators have been more suspicious about digital currencies and the potential hazards they pose to consumers. As a result, governments in the United States, the European Union, and elsewhere have introduced frameworks for regulating the industry.

When a representative from Nubank was asked whether the firm had attempted to gain regulatory permission in Brazil prior to the launch of its token, the representative responded that the company “constantly monitors the regulatory framework as a key element of our product development process.”

In 2013, Nubank made its debut in Sao Paulo, Brazil, a country infamous for its high-cost credit card system and low-tech banking infrastructure, with a purple credit card that charged no annual fee. Since the company’s inception nine years ago, it has amassed a total of 70 million customers across the countries of Brazil, Mexico, and Colombia.

The well-known businessman and investor Warren Buffett is listed as a backer of the online bank Nubank, which went public in the latter half of 2017. In June of 2021, Buffett’s company, Berkshire Hathaway, invested a total of 500 million dollars in Nubank. The stock market places the value of the company at $20.4 billion, which is nearly half of what it was worth when it first went public in December 2021.

In the past, Nubank has ventured into the world of cryptocurrencies with its Nucripto platform. This platform allows for the buying and selling of a variety of tokens, including bitcoin and ether. After only one month of operation, the cryptocurrency exchange, which is powered by software developed by Paxos, a firm that specializes in blockchain infrastructure, achieved one million customers in July.

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