Venezuela state oil company to use cryptocurrency exclusively, Maduro says

Venezuelan President Nicolás Maduro said state-owned oil company Petróleos de Venezuela, S.A (PDVSA) will carry out all its transactions in petro cryptocurrency from August 20 onward, according to Sputnik.

“All PDVSA operations will be conducted in Petro, this is a fundamental change to the country’s monetary system,” Maduro said.

Maduro also said that the petro will be linked to the new bolívar, which was also announced to go into circulation on August 20.

In March, U.S. president Donald J. Trump signed an executive order to impose additional sanctions on Venezuela by prohibiting the exchange of its controversial cryptocurrency, the petro, which was launched to bypass existing sanctions.

Venezuelan President Nicolás Maduro hoped that the introduction of the petro would aid the country’s troubled economy, which has been crippled by corruption, plummeting investment and is struggling with hyperinflation and international sanctions.

The petro, which officially started its pre-sale on February 20, will be backed by Venezuela’s crude oil reserves and is issued by the state. According to Maduro, the petro raked in more than $5 billion, as reported by Bitcoinist.

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The digital token was first announced by Maduro in December 2017 as a way to circumvent U.S. and European Union sanctions against government and ruling party functionaries, and supplement the Venezuelan bolivar which is plunging in value. The country has been in a socioeconomic and political crisis since 2012.

The petro will initially exist as a token on top of the Ethereum network, according to its early whitepaper, but CoinDesk reported that it’s possible the petro will later be built on top of the lesser-known NEM blockchain platform. It will be pre-mined, meaning the government will control the supply. According to the government, each petro will be backed by a barrel of oil and will be sold at the same price.

“Petro is born and we are going to have a total success for the welfare of Venezuela,” President Nicolas Maduro said on Tuesday, as reported by Al Jazeera. Politicians and government Twitter accounts are using the hashtag #PetroParaVencer, meaning “Petro to conquer,” to promote the digital token.

Venezuela’s opposition-run congress has declared the petro as illegal. “This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” said politician Jorge Millan. “It is tailor-made for corruption.”

In a short analysis on the petro, the Lex column of The Financial Times, noted the irony of an autocratic administration launching a cryptocurrency. It said the petro had more to do with bringing U.S. dollars into the struggling economy and perhaps bypassing sanctions, than an anti-authoritarian strike against banks and states which cryptos were initially designed to avoid. “Right now (investors) can only buy them with hard currencies, such as U.S. dollars, rather than the wrecked Bolivar. This is the real plan in motion.”

The country is launching the petro during a push by many countries to increase regulatory oversight of cryptocurrencies or even prohibit their use, as is the case in Saudi Arabia and China.

Does the petro add up?

The Venezuela White Paper–a Venezuelan perspective

The content of the White Paper offers a portal into the potential realities of the market.

Nintey-Two Years of Venezuelan Debt Crisis–a market perspective

A perspective from The Economist on the economic position of Venezuela.

U.S. Sanctions against Venezuela (New York Times)

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