nu bank onboards 1 million crypto customers

Brazil’s largest digital bank Nu Bank has reportedly reached an important key milestone recently as 1 million users have used its crypto trading platform only a month after its official launch.

The bank announced this achievement in a brief blog post published a couple of days ago where it highlighted the benefits of the service, including the possibility of investing in cryptocurrencies with as little as R$1 – Brazil’s official currency.

For now, the platform only allows users to buy Bitcoin (BTC) and Ethereum (ETH) but the bank confirmed that “other digital currencies are expected to enter the app soon”.

According to Nu Bank’s latest earnings report, the company had 59.6 million customers, meaning that a small percentage of its customer base has signed up for the service. However, at this pace, the bank may be well on its way to becoming one of the largest platforms to buy cryptocurrencies in Brazil.

Mercado Bitcoin is the toughest domestic competitor for Nu Bank as the platform reportedly had over 2 million users by the end of July 2021. However, the firm seems to be struggling lately due to the crypto winter as its parent company – 2TM – recently laid off 12% of its workforce in response to “changes in the global financial landscape”.

However, other large exchanges such as Binance and Coinbase (COIN) also have operations in the country as the decentralized nature of cryptocurrencies allows them to offer access to this market without necessarily securing a license in the country they operate.

How Does Nu Bank Cripto Works?

Nu Bank’s crypto service relies on the Paxos blockchain to operate. In this early stage, users are still not able to withdraw or deposit cryptocurrencies directly but they may in the future as the bank continues to refine its platform.

Paxos is a pioneer in the blockchain space and many exchanges and institutions have partnered with the firm as its parent company – the Paxos Trust Company – is one of the few to have secured a license to operate as a regulated custodian of digital assets in the state of New York.

Other products made available by Paxos include a gold-backed digital token – PAX Gold – and a reserve-backed stablecoin called USDP. Paxos is also the owner of the itBit crypto exchange.

Brazilians Have Rapidly Embraced Cryptocurrencies

Cryptocurrencies in Latin America have served as an escape valve for investors who would like to protect the purchasing power of their assets from the negative impact of inflation – as is the case of Argentina and Venezuela – or to bypass government-imposed forex controls.

Brazil recently ranked fifth in peer-to-peer (P2P) trading volumes for cryptocurrencies according to a report from Chainalysis. A P2P transaction is settled without the involvement of an intermediary. However, platforms such as Binance have made available a system through which investors can easily complete their operations while the exchange can act as a mediator in case there is a dispute from one of the parties involved.

Nu Bank’s Prospects Are Bright But Its Share Price Has Still Suffered This Year

Nu Bank is one of the world’s leading digital banks and it has received the support of top investors including Warren Buffett and Softbank’s Masayoshi Son.

The company went public in December last year and shares closed 15% higher during their first day of trading. However, shares accumulate a 57.4% loss since 2022 started as macroeconomic conditions have diminished investors’ appetite for risk.

Nu Bank provides its services to customers in Brazil (its most important market), Mexico, and Colombia. According to the firm’s statistics, 33% of Brazil’s adult population is a customer of Nu Bank. However, in Mexico and Colombia, the percentage is much lower at 2.2% and 0.5% according to the firm’s Q1 2022 earnings report.

During this same period, the company more than tripled its revenues compared to the previous year as it brought $877.2 million. However, the firm has been losing money on a quarterly basis as its reserves for credit losses are quite high and eat up a large chunk of the bank’s revenues.

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