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Crypto to bypass sanctions? Yes, says Venezuela’s President Maduro (www.blockcast.cc)

The government of Venezuela has floated a new use case for cryptocurrencies, President Nicolas Maduro said during a recent speech, one that highlighted the possibility of using digital assets in trades, alongside the cryptocurrency Petromoneda (or Petro). The controversial Petro was launched two years ago to reduce the Venezuelan economy’s dependence on the U.S dollar. However, according to many foreign observers, the experiment has been a failure.

During the aforementioned speech, President Maduro presented an anti-sanctions law before the Constituent National Assembly, one that aims to “strengthening the use of Petro and other cryptocurrencies.” According to the President, such a law would stimulate the development of various sectors in the South American nation. Maduro added,

“The anti-sanctions law is the first response to give new strength to the use of petro and other cryptocurrencies, national and global, in domestic and foreign trade, so that all cryptocurrencies of the world, state and private, could be used. This is an important project that is under development.”

After U.S. sanctions blocked Venezuela from carrying out global transactions, the President had announced that the country’s central bank would actively study whether the bank could hold cryptocurrencies in its reserves.

In fact, several months ago, Maduro had airdropped state-supported stablecoin Petro, a step that was seen in many quarters as an attempt to rein in hyperinflation and the drop in oil prices using crypto. The speech in question, however, did not clarify if its use of cryptos would also function along the same lines.

On the contrary, a study by blockchain and crypto-analysis firm Chainalysis had found that,

“Venezuela represented an excellent example of cryptocurrency adoption in developing countries and how citizens use it to mitigate economic instability.”

In fact, the South American nation was ranked third in terms of global crypto-adoption by the study, as seen in the image below.

Image Source: Chainalysis

Besides, Brazil has also announced plans to launch a CBDC soon, which, along with the Venezuelan crypto, could further drive the adoption of cryptocurrencies in the Latin American region.

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Nicolas Maduro: You Can Now Buy Our Venezuelan Oil in Crypto Petro

Venezuela’s national cryptocurrency already buying industrial metals

Per El Nacional, the socialist pleader revealed that the South American country has already been selling iron and steel in petros:

We are going to sell Venezuelan oil in petros. We’re already selling the iron and steel of Venezuela in petros. We also have a signed contract for the sale of oil, steel, iron, aluminum and we are going to sell part of the gold production in petros.

While making the announcement, the Venezuelan president attributed the move to the success of earlier initiatives by the government to popularize the use of the national cryptocurrency by citizens. According to Maduro, the crypto has proved successful in daily use. Though this could not be verified, last year in July CCN reported that Venezuela’s biggest department store was accepting petros for payments.

Who is buying with the Petro?

Based on the El Nacional report, Maduro did not name the companies or countries that are buying or planning to buy the country’s minerals in petros. In the case of oil, for instance, U.S. sanctions have scared away potential buyers.

This means that even if customers were willing to buy oil in the Venezuelan cryptocurrency, sanctions were already discouraging them from doing business with the country. By November 2019, the amount of oil lying in storage tanks in Venezuela over lack of customers had reached 30 million barrels.

Interestingly, the primary purpose of the national cryptocurrency is to evade U.S. sanctions. Maduro declared his intent to sell Venezuela’s oil for Petro a little over a year ago.

This article was edited by Sam Bourgi.