The world of cryptocurrencies has seen many ups and downs recently with several proponents in the space pushing hard for the mainstream adoption of digital assets. One unlikely candidate has been Petro, the state-backed cryptocurrency created by the Nicolas Maduro-led Venezuelan government.
The cryptocurrency has drawn a lot of flak from its citizens as well as bodies from around the globe, the main issue pertaining to the lack of oil that Petro is supposed to be linked to. Another major issue in Venezuela is the rampant rise of inflation and the growing dissidence in the public forum.
The latest update on Petro from the government of Venezuela states that the value of the cryptocurrency will be hiked to 36,000 sovereign bolivars. The state said that the increase and a higher minimum wage is aimed to combat the “criminal dollar”. In a video, Maduro stated:“I want us to create a great alliance to produce and create new formulas of investment and financing.”
The newly proposed plan is to increase the minimum wages by 300 percent to 18,000 bolivars per month, while simultaneously increasing the value of Petro by four times. The President has said that this new framework will stabilize the crumbling economy, an economy that analysts predicted would touch the rate of 1 million percent in 2018.
Criticisms against the new model are far-ranging, involving economists and opposition leaders. Juan Guaido, the leader of the Nation Assembly of Venezuela, had said:“Today, Nicolas Maduro mocks the Venezuelan people, once again, after taking economic measures that only bleed more in the pocket of Venezuelans. The Venezuelan economy does not improve with an increase in the salary.”
Elsewhere, Asdrubal Oliveros, the director of Econalitica, a research organization, gave his opinion by saying:“There is no intention to rectify the direction of the economy so it will continue on its deteriorating path in 2019.”
Petro was also in the news recently when Nicolas Maduro’s government filed a complaint in the World Trade Organization [WTO] against the sanctions taken by the United States. The complaint read:“The United States has imposed certain coercive trade-restrictive measures on the Bolivarian Republic of Venezuela in the context of attempts to isolate Venezuela economically.”
US Treasury Sanctions Russian Bank Over Links to Venezuela’s Petro
The U.S. Department of the Treasury has sanctioned a Moscow-based bank over its role in financing Venezuela’s controversial petro cryptocurrency.
The Treasury announced Monday that its Office of Foreign Assets Control (OFAC) has added Evrofinance Mosnarbank – which is jointly owned by Russian and Venezuelan state-owned firms – to the Specially Designated Nationals List, as it was the “primary” international bank that helped finance disputed Venezuelan president Nicolas Maduro’s “failed” petro project.
“Early investors in the Petro were invited to buy the cryptocurrency by wiring funds to a Venezuelan government account at Evrofinance,” the Treasury said, adding:
“Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.”
The Treasury has also said that Evrofinance supported Venezuelan state-owned oil company Petroleos de Venezuela S.A. (PdVSA), which has “long been a vehicle for corruption, embezzlement, and money laundering by Maduro and his cronies.” The firm has also been on the U.S. sanctions list since January.
Treasury Secretary Steven T. Mnuchin said:
“The United States will take action against foreign financial institutions that sustain the illegitimate Maduro regime and contribute to the economic collapse and humanitarian crisis plaguing the people of Venezuela.”
In response to the Treasury’s action, Evrofinance issued a statement on its website on Monday, stating that the bank “continues to operate in a stable manner,” and that it will “unconditionally fulfill all its obligations to customers and partners in full.”
With the addition of the bank to the SDN list, the Treasury said “all property and interests in property of this entity, and of any entities that are owned, directly or indirectly, 50 percent or more by this entity, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.”
Venezuela’s petro was first launched in pre-sale in February 2018, and went on sale to citizens in October via a government portal.
Petro and Venezuela: Sunacrip starts regulating and taxing cryptocurrency remittances
Venezuela and its tryst with the field of cryptocurrencies has been ongoing for a long time now and with the advent of Petro and the passing of stringent laws surrounding it, it looks like updates about crypto will continue to occur.
The latest development from Venezuela is that the country has started regulating and taxing cryptocurrency remittances. The regulator, the National Superintendency of Crypto Assets and Related Activities or Sunacrip has set a monthly limit for remittances and will be collecting commissions of up to 15 percent of the transaction amount. One of the official decrees stated:“The sender of the remittances referred to in this ruling is obliged to pay a financial commission in favor of Sunacrip up to a maximum amount of 15% calculated on the total of the remittance.”
Reports from within Venezuela have also said that the Sunacrip’s minimum commission rates are “equivalent to 0.25 euros per transaction”. The regulation also claims that Sunacrip now has the vested power to control key factors of the remittances. This includes establishing the remittance limits, specifying tariffs, setting values of cryptocurrencies in sovereign bolivars and requesting data from the issuers and receivers involved in the transactions.
Sunacrip was also in the news recently on February 4, when a decree establishing a legal framework for cryptocurrencies in Venezuela came into force. The release was called the “Constituent Decree on the Integral System of Crypto Assets”, which included 63 articles split into different sections. The Superintendent of Sunacrip even tweeted:“Today the constituent decree that will govern the operation of the Integral System of Crypto Assets of Venezuela was published in Official Gazette Number 41.575.”
The remittance market being controlled by Sunacrip has not gone down well with the general public of the opinion that it is “the most absurd thing that anyone has ever seen”. Others voiced their disdain by stating that the new framework, as well as the centralized control of Sunacrip, actually hinders the mainstream adoption of cryptocurrencies.
Venezuela Gives Maduro the Boot, Will This be the End of His Petro Cryptocurrency?
The world is watching complete chaos in Venezuela, which is dire financial straits. Crypto investors who steered clear of a crypto offering peddled by the country’s president should be breathing a sigh of relief.
Venezuela’s president Nicolás Maduro is being ousted over the country’s miserable financial situation. Opposition leader Juan Guaidó announced himself as the country’s new leader this week.
Petro Was Meant to Fuel Economy But Never Had any Steam
Under Maduro’s leadership, which has been deemed a dictatorship, the country’s economy suffered immensely. The most staggering figure that sums up how bad the country’s economy has gotten relates to inflation. It’s up a mind-boggling 10 million percent.
Millions of people have packed up and left the country. Those who have stayed must deal with power averages and short supplies of basics like food and medicine.
Maduro said he wanted to help the country’s economy. To help, Maduro proposed the Petro.
To much fanfare, Maduro announced last fall that the Petro was available for sale. Buyers could purchase the token with Bitcoin and Litecoin. The problem was — and continues to be — that there’s little, viable proof.
In October, CCN reported that Venezuelans weren’t even buying the Petro. Instead, they were loading up on Bitcoin. For instance, Bitcoin trading volumes in the country hit unprecedented highs. The country became known as being the home of the most prolific bitcoin traders on earth relative to the country’s population.
Ramming Petro Down Investors’ Throats
Maduro reacted by ordering local banks to accept the Petro and even hinted at charging for exports in it. There were also reports that pensioners’ bolivars from their accounts and replacing them with their cryptocurrency, the Petro.
Maduro touted the Petro as a means to help the country right its financial ship. The Petro is backed by the country’s oil reserves, Maduro claimed. Venezuela has the world’s largest oil reserves.
Savvy observers dismissed that reasoning. They believe Maduro pushed for the token as a means to circumvent the U.S. economic sanctions.
CCN reported that the sanctions were debilitating, so Maduro moved to monetize the country’s primary export product to a vast global market of investors without needing the U.S. Dollar.
Venezuelan officials claimed funds from investors all over the world would flow into a specific region. That would lead to job creation and breathe new life into Venezuela’s creaking oil export industry.
A Reuter’s investigation debunked that claim.
New Leader Doesn’t Care for Petro At All
Guaidó has made his disdain for the Petro clear. He believes it’s a scheme by Maduro to exploit the public.
— Juan Guaidó (@jguaido) December 27, 2017
Maduro dice que el Petro tendrá como respaldo la faja petrolífera, es decir no es una Cripto Moneda, puede ser un bono electrónico con respaldo o cualquier estafa que nadie les creerá. Una Guiso-Moneda en definitiva
— Juan Guaidó (@jguaido) December 27, 2017
Take these tweets from Guaidó from 2017.
Guaidó Gets Congrats From World Leaders, Except These Guys
U.S. President Trump took to Twitter Wednesday to recognize Guaidó as the interim leader
The citizens of Venezuela have suffered for too long at the hands of the illegitimate Maduro regime. Today, I have officially recognized the President of the Venezuelan National Assembly, Juan Guaido, as the Interim President of Venezuela. https://t.co/WItWPiG9jK
— Donald J. Trump (@realDonaldTrump) January 23, 2019
Other world leaders who support Guaidó include Canada’s Minister of Foreign Affairs and Foreign Secretary. The Secretary, Jeremy Hunt, tweeted:
My statement on the situation in Venezuela pic.twitter.com/5Tt5jK4Dcm
— Jeremy Hunt (@Jeremy_Hunt) January 24, 2019
The U.K. and several South American nations followed suit.
Maduro has some support from other nations. Mexico, Turkey, China, and Russia have had his back. CCN reported that the Petro was the work of a joint collaboration between Venezuelan and Russian government officials with Putin’s personal approval.
Having Trump’s support is important, notes Clay Porter of Navigant Consulting. Porter heads investigations in the Global Investigations & Compliance practice of the firm.
He told CCN:
I don’t think the opposition leader would want to double down on a mechanism that was meant to circumvent U.S. sanctions. From a political sense, it wouldn’t make any sense [for Guaidó] to embrace [the Petro] if the U.S. government is supporting him.
Protests Plague Beleaguered Nation
Maduro was sworn in for a second term at the beginning of the year. His election was immediately criticized.
Guaidó is pushing for free and fair elections to be held ASAP. He’s called on the Venezuelan military to disobey orders from the government. Maduro has significant support among military leaders.
An estimated 26 people died this week in protests.
Nicolas Maduro Image from AP Photo/Ariana Cubillos