Hopes were high as the news made rounds that Venezuela would launch the first national cryptocurrency backed, by Venezuelan crude oil. The country has been beleaguered with runaway inflation in recent years prompting citizens to lose confidence in the national currency as has been the case in another country Zimbabwe. The government in a bid to shore up the economy has looked up to creating a national cryptocurrency and the blockchain technology to generate needed funds for an ailing economy.
The Venezuelan president announced in January that 100 million petros, the Venezuelan oil backed cryptocurrency would be offered for sale. Each petro would be backed by Venezuelan oil and sold at the price of a barrel of crude oil. Miner for the coin met in Caracas where they deliberated on the petro coin whitepaper on January 14 after the president’s announcement about the coin which would be pre-mined.
The United States’ Treasury Department, however, warned that investing in the petro would be tantamount to helping the socialist government circumvent US sanctions in a statement that was targeted at dousing interest and enthusiasm of investors over petro. The United States has a large number of potential investors in the Petro mainly due to its population and strength of its economy. It has a large population of informed investors also who would not want to run foul of government regulations.
The Venezuelan president, Nicolas Maduro’s effort at using the petro cryptocurrency to refinance the country’s crippled economy is seen by the US government as an attempt to extend credit to the country. The Treasury Department said that US investors could be liable to legal actions if they invested in the Venezuelan digital currency.
The Venezuelan economy has been hard hit by inflation that has made essential commodities such as food and medicine scarce due to the sanctions, but the American government sees investment in the petro digital currency as a lifeline that may keep propping up the socialist government of Mr. Maduro.
The Treasury Department’s announcement has effectively foreclosed the possibility of any major corporate investors getting involved in the petro as US banks and companies are usually wary of legal actions, according to sources in the finance sector. The crude oil price has risen to around $70 per barrel which has given the Venezuelan government a window opportunity of realizing about $6 billion in sales of the petro should things go as planned.
Meanwhile, a Venezuelan delegation is in Quatar to negotiate with the Quartari government on how they could invest in the petro which goes on sale next month. The delegation was led by a Venezuelan crypto expert Carlos Vargas and was in Doha to offer the government some discount deals to come in as early investors in the upcoming petro ICO.
Institutional investors have been allocated about 36 million of the 100 million petro on sale. This is expected to bring in $1.3 billion in the sales that are expected to commence February 15. Efforts made by correspondents to speak with the Venezuelan delegation and the Quatari information ministry on the meeting between the two governments representatives was rebuffed.