The Brazilian bank Nubank will shortly launch a cryptocurrency rewards program. The latest foray into digital assets by a major financial institution will occur next year when the Brazilian startup for digital banking Nubank introduces its own coin.
Nubank said Wednesday it will launch the token, called Nucoin, in the first half of 2023. Holders of the token will receive discounts and other benefits, according to Nubank.
The digital bank, which is supported by investors such as Softbank Group Corp. (9984.T) and Berkshire Hathaway (BRKa.N), led by Warren Buffett, reported having 66.4 million customers in Brazil, its primary market, up from 62.3 million at the end of June. A holding company, Berkshire Hathaway Inc., owns subsidiaries involved in a range of commercial endeavors, including manufacturing, retailing, freight rail transportation, utilities and energy, insurance and reinsurance, and utilities.
What is Nucoin?
In 2013, Nubank made its debut in Sao Paulo, Brazil, with a purple no-fee credit card. Brazil is infamous for its high-fee, antiquated banking system. The company has accumulated 70 million users across Brazil, Mexico, and Colombia since its start nine years ago.
The coin was created using the “Layer 2” Polygon network, which aims to reduce congestion on the Ethereum blockchain, where transactions can sometimes be expensive and time-consuming to complete. According to Polygon, its platform can handle hundreds of transactions every second. Companies like PayPal and Robinhood also provide cryptocurrency trading. While this is going on, the Wall Street bank Goldman Sachs has its own internal cryptocurrency trading department.
About 2,000 customers will be invited to take part in a debate on the project’s specifics, including its Web3 features and decentralized method of product creation, starting this month.
In May, the bank announced a partnership with Paxos to enable its customers to buy, sell, and store cryptocurrencies through its app. This move aimed to improve access to crypto assets, reduce complexity and friction for users to buy, hold, and sell digital currencies through the bank’s app, and eliminate the need to open or transfer money using a new account.
What Makes Nucoin Different?
Earlier this year, Warren Buffett’s Berkshire Hathaway sold off a portion of its interests in Visa and Mastercard and increased its exposure to Nubank by investing $1 billion in equities after selling $3.1 billion in shares of each of the two companies.
The new token launch coincides with a depressing period for cryptocurrencies. Many digital coins, including the biggest currency in the world, bitcoin, have lost more than half of their value since the beginning of 2022, and the market is currently experiencing a severe downturn that speculators are dubbing “crypto winter.” Its objective is to provide clients with advantages like discounts and rewards as they acquire Nucoins. The tokens can be exchanged for benefits and special prices on particular goods.
Governments in the United States, the European Union, and other countries have introduced frameworks for regulating the business, and regulators have since grown more cautious about digital currencies and the potential damages they pose to consumers.
According to Nubank, there is a chance that Nucoins might one day be tradable. Currently, the lender’s banking software lets its Brazilian customers conduct Bitcoin and Ethereum transactions.