Venezuela Unveils ‘Petro’ Cryptocurrency To Shrug off U.S Led Financial Sanctions

Venezuela government is working on a new cryptocurrency as it looks to circumvent financial sanctions, initiated by the U.S, that have crippled the economy. In a Christmas television special, President, Nicolas Maduro, said the cryptocurrency will be backed by commodity reserves of oil gold and natural gas.

Petro Cryptocurrency

The President is banking on the new cryptocurrency, dubbed ‘Petro’, to reduce the country’s dependence on the U.S led sanctions. The leftist leader expects the new currency to help the country advance issues of monetary sovereignty and overcome the financial blockade.

Maduro’s believes Petro is the only way the country will be able to meet its financial obligations on the global scenes. He also expects the cryptocurrency to help combat Washington-backed conspiracy that he believes intends to end socialism in Latin America.

Bolivar, the country’s currency has felt the full effects of sanctions imposed by the Trump’s administration, Its value against the dollar having taken a big hit. Rapid inflation in its prices has resulted in a surge in consumer prices considerably affecting consumer’s purchasing power.

A move by Venezuela to venture into the cryptocurrency space underscores the challenges the country faces as it tries to move cash around international markets. With the bolivar consistently in free fall, the country is in dire need of a stable currency to be able to take part in the export and import business.

Currency Controls Effects

Attempts’ by Maduro and regime to shore up bolivar’s value have failed miserably. Excessive money printing and currency controls have led to a 57% depreciation of the country’s currency against the dollar, consequently dragging the monthly minimum wage to $4.30.

Currency controls have since forced some people to shift towards cryptocurrencies such as bitcoin. The shift has helped most of them bypass the controls and gain access to dollars considerably boosting their economic stability.

Maduro sentiments come as bitcoin continues to set new highs while garnering massive interest across the globe. There is already talk that the cryptocurrencies wide acceptance could soon result in it becoming a valid asset for mainstream investors.

However, opposition leaders have already shown the clearest indication that the realization of a Petro is a farfetched dream. The legislators maintain that any step to introduce a new currency in the country will need congressional approval something that is unlikely to happen anytime soon.

“It’s Maduro being a clown. This has no credibility,” opposition lawmaker and economist Angel Alvarado told Reuters. Fellow opposition leader Jose Guerra has also suggested that there is no hope of Petro ever seeing the light of day.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Image courtesy of Rodrigo Suarez via Flickr