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Venezuela Requests Oil Purchases to be Made in Government Backed Cryptocurrency

By Mark Lemon – Cryptocurrency Expert

Two years ago, the oil-rich nation of Venezuela launched their government backed cryptocurrency Petro. Venezuela intended to use this currency to maintain access to international financial markets. Many believed this to be a means to work around wide-reaching U.S sanctions. Reports show, however, that the project has faced difficulties and does not appear to be an active form of monetary exchange on any cryptocurrency trading market. Recently, the country declared crude oil purchases and port fees are to be made in its failed cryptocurrency, with buyers reacting negatively to the questionable strategy.

Although banners and advertisements with the Petro symbol decorate government buildings in Caracas, it remains overlooked by local Venezuelans who are unsure of how or where to buy it. Though the currency is backed by the country’s oil reserves, the largest in the world, oil buyers are hesitant and remain concerned that payments under this system would violate sanctions if they are to buy and sell cryptocurrency for its use.  Exports of over 1 million barrels of crude oil were frozen as a result.

The Venezuelan President, Nicolas Maduro, aims to limit his nation’s dependence on foreign currencies and markets. The shift to demand cryptocurrency payments tries to achieve this, especially as the country’s crude exports began rebounding in December after recovering from U.S sanctions on their oil company, Petro leo de Venezuela SA. President Maduro continues to guarantee the revival and success of the currency in his annual speech.

Bloomberg published a document in March 2018 addressing the sanctions. It notes how crude buyers often use shipping agencies native to Venezuela to facilitate the port fees. Buyers are therefore typically not involved. The report acknowledges at least one firm who last year, included a clause that prohibited agencies from buying crypto using money transfers. Today, many companies use an exchange model for oil, rather than paying in cash. Swap transactions might include the trade of crude oil for gasoline or other fuel.

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