CARACAS, Venezuela, Tuesday, April 30, 2024 – Venezuela is reportedly considering a significant acceleration of cryptocurrency usage in the wake of renewed US oil sanctions, according to a report from Reuters.1
This speculation comes after Venezuelan oil minister Pedro Tellechea recently hinting at digital currencies becoming a preferred payment method.2
The move could mark a further push towards crypto adoption in a country already grappling with economic turmoil.
The sanctions, re-imposed on April 29th, 2024, target Venezuela’s state-owned oil company, PDVSA. This could significantly impact the nation’s oil exports, a crucial source of revenue.
The report suggests that PDVSA is exploring increased use of cryptocurrency, particularly Tether (USDT), for its oil and fuel exports.
This could allow Caracas to bypass traditional financial channels that could be disrupted by the sanctions.
The US Treasury Department’s decision not to renew a general license by May 31 complicates matters for PDVSA, following a $21 billion corruption scandal.
PDVSA initiated oil sales via USDT in 2023, accelerating adoption due to re-imposed sanctions.
PDVSA has integrated crypto into its system, demanding prepayment in USDT for oil cargoes. New customers must hold cryptocurrency, even for existing contracts.
To navigate compliance challenges, PDVSA relies on intermediaries, albeit incurring additional fees. Tether pledges to freeze addresses linked to sanctioned entities.
Venezuela has a history of embracing cryptocurrencies. In 2018, the government launched its cryptocurrency, Petro, although the project faced significant criticism and ultimately limited adoption.
The increased use of crypto for oil transactions could raise concerns about transparency and potential manipulation. Additionally, the volatility of the cryptocurrency market poses challenges for a nation seeking economic stability.
The full extent of Venezuela’s plans for cryptocurrency usage remains unclear. However, this reported move reflects the growing importance of digital assets in a world increasingly shaped by geopolitical tensions and financial sanctions.
Also, read this report
- reuters: https://www.reuters.com/business/finance/venezuela-accelerate-cryptocurrency-shift-oil-sanctions-return-2024-04-22/[↩]
- wionews: https://www.wionews.com/business-economy/venezuela-accelerates-shift-to-cryptocurrency-amid-return-of-oil-sanctions-714056[↩]
