Nubank, the Brazilian neobank backed by Warren Buffett, has launched its own cryptocurrency, nucoin. Digital tokens issued on the Polygon network will be airdropped to institutional end users, with 80% of the total issuance going directly to customers. The remaining 20% will be held by Nubank.
Nucoin will be used for several activities in the future, including a cashback program where users are rewarded in the form of tokens, and to implement internal nucoin sweepstakes. Nubank stated that there will be no secondary market for nucoin and transactions using the token will only be possible on its platform.
Nucoin is already available to some of the 70 million customers Nubank reported in September, with nearly 2 million of those customers purchasing the cryptocurrency. Nubank did not disclose the initial price of the currency.
According to local reports, Nubank will offer more options involving its currency, including a staking program that allows customers to lock up their nucoins to earn more nucoins over time or earn more internal raffle tickets. In the future, there will reportedly be an option to exchange nucoins for cash through the platform.
The release and launch of nucoin came as no surprise to some, as Nubank has been working on the initiative since last October, when Nubank senior managing director and managing director Fernando Czapski said the company believed in the “transformative potential of blockchain technology.” and its democratization.
Nubank, one of the largest digital neobanks in Latin America, will launch a cryptocurrency trading option on its platform in May 2022. The nucoin launch is similar to what retail and financial services company Mercado Libre launched last August, when the organization also issued its own cryptocurrency, called mercadocoin, as part of its loyalty program. However, Mercado Libre set an initial price for its token, which was worth $0.10 at launch.
Nubank’s foray into the crypto space is part of a broader trend of financial institutions embracing digital currencies. Several traditional banks, including JPMorgan, have launched their own cryptocurrencies in recent years. While some experts see the trend as a sign of the growing popularity of digital currencies, others warn that cryptocurrencies can be highly volatile and regulatory frameworks are still being developed to address their unique challenges.
Nubank has not disclosed plans for any other cryptocurrencies or other blockchain initiatives. However, the launch of nucoin is a clear signal that the neobank sees digital currencies as an important part of its future growth strategy.