July 5, 2019 | AtoZ Markets - Venezuela’s president Nicolas Maduro has ordered to put the national oil-backed Petro crypto in circulation in all branches of the country’s leading bank, Banco de Venezuela.
Petro crypto in circulation after Maduro’s order
The Finance Ministry of Venezuela announced on Twitter on July 4, that country’s president Maduro gave “the express order” to open oil-backed national crypto desks in all Banco de Venezuela branches. The announcement was made during an event celebrating the tenth anniversary of the nationalization of the bank in question.
Earlier the President of Venezuela announced that 924 million bolivars (over $92.5 million) were allocated to the Digital Bank of Youth and Students “to open one million Petro wallet accounts for the country’s youth.”
José Angel Alvarez, president of the country’s National Cryptocurrency Association, in one of his recent interviews called the order to put Petro crypto in circulation a “bold and correct decision to move forward towards a hybrid economy where the fiat currency competes face to face with crypto.
Trump adds Petro into blacklist, Russia discusses bilateral trading in Venezuela’s crypto
The initiative to create state crypto was announced by the President of Venezuela Nicolas Maduro back in December 2017.
In October 2018, the Venezuelan Economy Department announced on Twitter that Petro can now be purchased for fiat and crypto. Back then the country’s citizens were able to purchase coin directly from the country’s treasury via its official website or from the six cryptocurrency exchanges authorized by the government.
In January 2018, the Venezuelan parliament invalidated Petro. The opposition-led officials called the oil-backed crypto an illegal attempt to mortgage Venezuelan oil reserves.
In the same period of time, in response to Venezuela’s initiative US president Donald Trump signed an executive order prohibiting US citizens and residents from investing or undertaking the transaction on tokens or digital currencies linked to the Venezuelan government.
In March 2019, one of the opposing lawmaking bodies in Venezuela ruled out that the national cryptocurrency Petro is illegal in the country. The officials have based their decision on domestic law articles.
However, just a few months later, the local media reported that Venezuela and Russia are negotiating on how to replace the USD with Petro crypto in bilateral trade.
Petro crypto in circulation in Venezuela against the background of the national economic crisis
Venezuela is still going through an economic and geopolitical crisis and hyperinflation with its capital Caracas turning into a zone of gun conflicts. 80% of the population living in extreme poverty without food, medical supplies, and basic services, and president Maduro is blamed by the people for mismanaging the country. Maduro is supported by the Venezuelan military, Russia and China.
However, according to the latest report from the New York Times, in economic matters, Russian state-owned companies are cutting back on the business they do with Venezuela to protect their funds.
The Russian government also refused to issue Venezuela new credit lines, to commit to new investments or even to provide relief on existing debt to ease Maduro’s battle with the opposition.
China’s position regarding Maduro and his supporters' fate remains unknown.
Was the Venezuelan president’s decision to put Petro crypto in circulation the last attempt to regain the country’s citizen trust? Will it work out? Only time will show.
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