Venezuelan Petro Crypto Won’t Be Fueled With U.S. Investor Dollars
Venezuelan’s efforts to create its own crypto called petro face many hurdles, with the latest being the U.S. warning its investors not to touch anything that may be created.
Efforts in Venezuela to create its own cryptocurrency have hit another snag, as U.S. officials are sounding the bell about the sanctions it slapped on the South American country that mark such investments as off limits.
Specifically, the U.S. Treasury Department on Tuesday warned that Venezuela’s proposed petro cryptocurrency could violate sanctions.
This move comes on the heels of the Venezuelan parliament rejecting the crypto idea.
Petro to the rescue?
In December, the country’s president, Nicolas Maduro, called for the creation of petro, a crypto that would be backed by the country’s oil, gas, gold and diamond riches. It isn’t surprising that the country would seek to back a crypto with its oil because the commodity has historically contributed to its wealth.
Madura is reported to have said that his proposed crypto would allow Venezuela "to advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
Reuters found that Maduro wants each petro to be backed by one barrel of Venezuelan oil and be sold at the same price. Roughly 38 million petros could be sold with a face value of about $2.3 billion in private placements starting on Feb. 15 at a discount of up to 60%, according to Reuters. The news wire service found that plans are for another 44 million petros with a face value of $2.7 billion to be offered to the public the following month.
In crafting these lofty crypto plans, it seems the entire deal about the U.S. sanctions were ignored. The country, with its high debt load, can’t even refinance it.
The sanctions pretty much bar U.S. investors from touching anything related to Venezuela. The sanctions prohibit the purchase of newly-issued Venezuelan debt. Not having involvement from U.S. investors would be a major blow because it is so heavily depends on U.S. investors.
According to Reuters, the Treasury Department sees the petro as an extension of credit to the Venezuelan government. Because of that, it could expose U.S. citizens to legal risks.
“(It) is another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”- Treasury Department