Last Updated on 58 mins by cryptoevent

Brazil’s largest digital bank, Nu Bank, reportedly recently hit a major milestone as 1 million users used its crypto trading platform just a month after its official launch.

The bank announced this achievement in a short blog post published a few days ago, which highlighted the benefits of the service, including the ability to invest in cryptocurrencies with just R$1 – Brazil’s official currency.

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

According to Nu Bank’s most recent earnings report, the company had 59.6 million customers, meaning a small percentage of its customer base signed up for the service. However, at this rate, the bank could be well on its way to becoming one of the largest cryptocurrency buying platforms in Brazil.

Mercado Bitcoin is the closest domestic competitor for Nu Bank as the platform reportedly had over 2 million users by the end of July 2021. However, the company 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 major exchanges such as Binance and Coinbase (COIN) also operate 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 where they operate.

How does Nu Bank Cripto work?

Nu Bank’s crypto service relies on the Paxos blockchain to operate. At this early stage, users will not be able to withdraw or deposit cryptocurrencies directly yet, but they will in the future as the bank further refines its platform.

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

Other products made available by Paxos are a gold-backed digital token – PAX Gold – and a reserve-backed stablecoin called USDP. Paxos also owns crypto exchange itBit.

Brazilians have been quick to embrace cryptocurrencies

Cryptocurrencies in Latin America have served as an escape valve for investors looking to protect the purchasing power of their wealth from the negative effects of inflation — as in the case of Argentina and Venezuela — or to circumvent government-imposed exchange controls.

According to a report by Chainalysis, Brazil recently ranked fifth in peer-to-peer (P2P) cryptocurrency trading volume. A P2P transaction is settled without the involvement of an intermediary. However, platforms like Binance have provided a system through which investors can easily complete their trades, while the exchange can act as an intermediary in case there are any disputes between any of the parties involved.

Nu Bank’s prospects are good, but its share price has suffered this year

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

The company went public in December of last year, and shares closed up 15% on the first day of trading. However, shares have accumulated a 57.4% loss since the start of 2022 as macroeconomic conditions have reduced investor risk appetite.

Nu Bank provides its services to clients in Brazil (its main market), Mexico and Colombia. According to the company’s statistics, 33% of the adult Brazilian population are Nu Bank customers. However, in Mexico and Colombia, the percentage is much lower at 2.2% and 0.5%, according to the company’s earnings report for the first quarter of 2022.

During the same period, the company more than tripled its revenue year over year as it brought in $877.2 million. However, the company has lost money quarterly as its loan loss provisions are quite high, eating up a large chunk of the bank’s revenue.

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