Cryptocurrencies can be considered a game changer in the world of finance. Not only can it possibly remove third parties, it can also be used as a solution by those that usually have to face legal scrutiny in their transactions. And this doesn’t just mean tax evaders and money launderers. This also applies to countries suffering from an economic blockade.
Venezuela, aside from suffering from hyperinflation, has to deal with sanctions from different countries. Its solution is to create its own cryptocurrency. However, unlike other cryptocurrencies that are mainly based on speculation, they have oil to back it up.
How much money was it able to raise? This oil-backed cryptocurrency was able to raise $735 million during its presale. And Venezuela isn’t stopping there. With the success of Petro, Maduro announced that they are also going to have another virtual token. This time around, it is going to be backed by precious metals dubbed as the “Petro Oro”.
Trump Executive Order
It wasn’t exactly a smooth start for Petro despite the amount of money raised during its pre-selling. There were those that opposed the idea of Petro being used in their transactions with Venezuela. For some countries, the Petro is only a legal means for Venezuela to circumvent existing sanctions against the bolivar.
Recently, President Donald Trump issued an executive order that bans American individuals, businesses, and organizations to use Petro inside US territory. According to the executive order, Petro was described as “recent actions taken by the Maduro regime to attempt to circumvent US sanctions”. And it isn’t just in the US that Petro was having some opposition. Even one legislator from Venezuela’s National Assembly called it “illegal and unconstitutional” on Twitter.
Can Be Traded to Ruble
However, the Petro experienced success considering that it can now be traded to several global currencies including the Russian ruble. According to President Nicolas Maduro, “Starting March 23, all legal and physical entities will be able to purchase Petro directly… within the next 15 days, for convertible currencies: yuan, rubles, Turkish Liras and Euro”. he also added that these are the currencies that are considered the most important for “the economic future of the planet”.
Companies such as PDVSA can also trade the Petro. He said that “PDVSA and those enterprises that trade for foreign currency are authorized from now on to receive “el petro” for their export deliveries”.
In addition to this, Maduro announced four “exclusive economic zones”. Here, the petro can be used “for the sale of goods and payment of services”.
Is There a Bright Future for Petro?
Many have already given a negative opinion on Petro. Considering the fact that there are many regulators today that are tightening their control on digital currencies, is it really good timing for Venezuela to enter the crypto market? If you will ask Coin Center executive director Jerry Brito, he mentioned that “issuing a cryptocurrency is not going to help Venezuela escape sanctions”.
With the chance to exchange Petro with different currencies such as yuan and ruble, can this actually make a difference to Venezuela’s overall economic situation?