Reports suggest that the Venezuelan government is making preparations to wind down the operations of its national cryptocurrency, the petro. This decision follows the setback faced by Sunacrip, the Venezuelan cryptocurrency watchdog, due to allegations of corruption involving its former head, Joselit Ramirez, in a potential $20 billion scheme related to the settlement of Venezuelan oil sales.
Venezuela Considering Liquidating Petro Cryptocurrency
It appears that the era of the first-ever state-issued cryptocurrency may be drawing to a close. According to information from Bloomberg Linea, three individuals associated with Sunacrip have revealed that the institution has resolved to liquidate the petro, five years after its launch.
The purported decision, taken by the newly appointed restructuring board overseeing Sunacrip, would involve settling the debts owed to major petro holders within the country, including department stores that had accepted petros as a form of payment.
Prior to the release of this information, the market price of the petro had already plummeted, while the government-set price remains fixed at $60. The cryptocurrency was employed as a unit of account for setting prices for national documents such as passports, as well as for taxes and fines. However, it is currently unclear whether Sunacrip will utilize the government-set value for these payments and settlements.
End of an Era
Ceasing the operations of the petro would mark the end of an era during which the Venezuelan government actively promoted its use as a means to circumvent the sanctions imposed by the Obama and Trump administrations on significant state-owned enterprises like PDVSA, the state-owned oil company.
Venezuelan economist Aaron Olmos has expressed concerns, highlighting that the elimination of the petro would establish an unfavorable precedent. He stated:
“The discontinuation of the petro would entail dismantling something that was part of the 2018 economic proposal… this historical concept of an oil-backed currency… ultimately devolved into something that the government couldn’t control due to its association with inefficient public management.”
The demise of the Venezuelan petro would form a notable aspect of negotiations between the Biden administration and Nicolas Maduro’s government. Since its prohibition for purchase by U.S. citizens in 2018, under President Trump’s administration, the currency has not been utilized for international settlements, despite initial considerations for such purposes.
The liquidation of the petro would also be a part of the government’s efforts to address the corruption allegations surrounding Sunacrip, following the arrest of its former head, Joselit Ramirez, for his involvement in the sale of Venezuelan oil that never made it to the nation’s treasury.
In May, the Petro blockchain encountered operational difficulties, experiencing multiple interruptions. During that time, numerous wallets were reported to have been blocked.
We invite you to share your thoughts on the alleged liquidation of the Venezuelan petro cryptocurrency in the comments section below.
Frequently Asked Questions (FAQs) about petro cryptocurrency
What is the petro cryptocurrency?
The petro cryptocurrency is a digital currency issued by the government of Venezuela. It was introduced as a means to bypass sanctions imposed on the country’s state-owned companies and to promote economic stability.
Why is Venezuela considering shutting down the petro?
Venezuela is reportedly planning to shut down the petro due to a combination of corruption allegations and operational issues. The former head of the Venezuelan cryptocurrency watchdog, Joselit Ramirez, was arrested on charges related to a corruption scheme involving Venezuelan oil sales. Additionally, the petro has faced problems with its blockchain and experienced a decline in market value.
How long has the petro been in operation?
The petro cryptocurrency has been in operation for approximately five years since its issuance. It was launched in an effort to bolster the Venezuelan economy and provide an alternative to traditional financial systems.
What impact would the liquidation of the petro have?
The liquidation of the petro would mark the end of an era for Venezuela’s government-backed cryptocurrency. It would have implications for the country’s economic landscape, as the petro was used for setting prices, national document issuance, and tax/fine payments. The decision to shut it down would also be significant in the context of international negotiations and addressing corruption allegations.
Was the petro successful in its objectives?
The petro’s success in achieving its objectives is debatable. While it was intended to bypass economic sanctions and provide economic stability, it faced numerous challenges and limitations. The currency was never widely adopted for international settlements, and its association with corruption and inefficiencies in public management raised concerns about its effectiveness.
More about petro cryptocurrency
- Venezuela’s Petro Cryptocurrency
- Former Head of Venezuela’s Crypto Watchdog Arrested
- Operational Problems of Petro Blockchain
- Venezuela’s Petro: An Economic Proposal