Venezuela Forced Public and Private Banks to Adopt Petro

One of the most common reactions of regulators to cryptocurrencies is to take the necessary precautions. However, unlike other states like China that is looking to ban crypto-related activities in the country, there are the likes of Iran and Venezuela that has explored having a national digital currency.

In February, Venezuela made their own cryptocurrency. Unlike other cryptocurrencies, Petro is backed by oil, the country’s number one asset. There are a number of reasons why the Maduro administration decided to go after a cryptocurrency at this point.

One, Venezuela’s economy is dealing with hyperinflation. The bolivar has lost its value considering the inflation rate of Venezuela is expected to reach one million percent by the end of the year. Also, Venezuela is looking to address US sanctions imposed against the country.

Forced to Adopt the Petro

Nicolas Maduro has ordered Venezuelan banks to adopt the Petro. The Petro is currently tied to the new currency that is being used in the country which is the new “Sovereign Bolivar”. This order by Maduro is applicable to both private and public banks.

The newer sovereign bolivar is simply the same as the old one. It simply as a lower valuation. Venezuelans were asked to exchange 100,000 old Bolivar currency for just one Sovereign Bolivar.

However, it doesn’t really end there. Maduro has ordered the oil industry to use Petro for business transactions.

New Economic Plan?

Is it possible for Maduro to save the economy at this point? Recently, Venezuela raised the minimum wage by 3,400 percent. This means that the minimum monthly wage is a meager 0.5 Petro or $30.

The Petro is said to be a ‘stablecoin’. For this reason, it has been used to back the sovereign bolivar. One Petro is worth $60 while the Petro is tied to the value of Sovereign Bolivar.

Maduro isn’t just reliant on blockchain to save the economy. He launched new government bonds that are backed by gold. It was reported that this promotes savings for Venezuelans. It has also been done in order to protect disenfranchised Venezuelans form the devaluation of their national currency. Maduro even declared that “No one can say that gold loses its value”.

The Popularity of Cryptocurrencies in Venezuela

It isn’t just the Venezuelan government running towards cryptocurrencies. In fact, businesses and individuals are going after cryptocurrencies in the country. You have businesses that have accepted Dash in their transactions. In addition to this, there are also a growing number of people who are mining cryptocurrencies in the country. There was even a time when Venezuela decided to ban the importation of mining hardware.

These days, it is becoming common that countries are embracing cryptocurrencies. In fact, even India that has restricted banks from transacting with crypto-related businesses, are already looking closely at the possibility of a national cryptocurrency.

Will Venezuela improve the economy using blockchain technology? And yes, this can be considered an outside the box solution to an extreme situation. However, not everyone is on the same page in the country. In fact, Venezuela’s National Assembly has declared Petro as a fraud.