The Venezuelan Central Bank is researching whether the monetary system of the country allows it to hold cryptocurrencies (BTC and ETH) and count them toward their international reserves. Additionally, these anonymous sources claim that the national gas and oil production company, the ‘Petroleos de Venezuela SA (PDVSA), seeks to send cryptocurrencies such as Bitcoin and Ethereum to the central bank so that it can pay international suppliers.
Several nations under U.S. sanctions decided to adopt cryptocurrencies as a means to circumnavigate the economic restrictions placed on them. For example, the island-nation of Cuba uses cryptocurrencies such as Bitcoin to make international transactions, as the sanctions restrict them from using payment processors such as Visa or MasterCard.
North Korea and Iran have also adopted digital currencies to increase their international flow of money, as some corporations are prevented from conducting businesses with the nations due to U.S. sanctions.
Venezuela, a nation that was hit by one of the worst cases of hyperinflation in recent history, also implemented cryptocurrencies in their economy to battle their struggles. As salaries in the Venezuelan bolivar become less and less valuable, citizens have resorted to using Bitcoin as a store of value asset.
Under the command of president Nicolas Maduro, the country took the step to create a national cryptocurrency, named the ‘Petrodollar.’ As the nation faces geopolitical tension, in particular with the U.S., the petrodollar was created as a means to get around financial sanctions and sell oil to the global market.
The Petrodollar can be regarded as unsuccessful, as any level of true adoption and implementation was not achieved, the national cryptocurrency remains a pipedream in the eyes of most Venezuelans. Now, with the recent news of possible integration of cryptocurrencies by the Central Bank, it seems that Venezuela will adopt more established digital assets such as Bitcoin and Ethereum.
The Bloomberg report revealed that the PDVSA holds reserves of cryptocurrencies. As it is uncertain how they acquired the assets, it may be possible that international customers made transactions with cryptocurrencies, as the sanctions prevented them from paying in fiat currencies without being labeled as a supporter of Maduro’s regime.
Another conceivable notion is that Nicolas Maduro created cryptocurrency mining farms across his country, as the cost of electricity in the nation is one of the lowest in the world. By doing so, Venezuela could have acquired a large portion of cryptocurrencies to both capitalize on the disruptive sector and to avoid sanctions.
In either case, any reserves of either Bitcoin or Ethereum would require disclosure to the National Assembly. With the current political chaos and persecution of the opposition, it seems that Venezuelan citizens will need to wait until the next parliamentary elections in 2020 to get their answer.
Press officials asked both the Central Bank and the PDVSA to confirm the turn of events, however, both entities did not reply to their request. As we are yet to see whether the Central Bank will officially integrate cryptocurrencies into the monetary system and count them as international reserves, we now only know that Venezuela uses digital assets for private-channel transactions.
Progress of crypto adoption
In the recent few months, the Venezuelan government has accelerated the adoption of cryptocurrencies, introducing the option of petro to fiat transfers in one of the leading banks in the country, the state-owned Bank of Venezuela. A new module within the bank allows customers to set up a cryptocurrency wallet.
Now that the Central Bank is interested in truly adopting cryptocurrencies and even implementing them into their foreign reserves, it seems that cryptocurrency adoption may reach Venezuela on a national scale. Adoption could reach a level where users could freely send cryptocurrencies via banks, or even create savings accounts that would use Bitcoin as an asset.