Business World

Saturday 23 June 2018

Venezuela set to launch 'petro' cryptocurrency

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Girish Gupta

Venezuela is to launch its "petro" cryptocurrency on Tuesday, a move aimed at pulling the country out of an economic tailspin that blockchain experts have warned is unlikely to attract significant investment.

President Nicolas Maduro is hoping the petro will allow the ailing OPEC nation to skirt US sanctions as the bolivar currency plunges to record lows and it struggles with hyperinflation and a collapsing socialist economy.

Opposition leaders have said the sale constitutes an illegal debt issuance that circumvents Venezuela's majority-opposition legislature, and the US Treasury Department has warned it may violate sanctions levied last year.

Maduro was due to make the official launch in an evening address.

The official website for the petro on Tuesday published a guide to setting up a virtual wallet to hold the cryptocurrency, but did not provide a link for actually doing so. There was also no information on exchanges.

The first operations will be carried out through a private sale, Maduro has said, without elaborating.

Venezuelan Cryptocurrency Superintendent Carlos Vargas last week said the government was expecting to draw investment from investors in Turkey, Qatar, the United States and Europe.

The value of the entire petro issuance of 100 million tokens would be just over $6bn, according to details given by Maduro in recent months, though no new price information was provided on Tuesday.

The tokens will each be valued at and backed by a barrel of Venezuelan crude oil, Maduro has said.

Advisers working for the government have in the past recommended that 38.4pc of the petros should be sold in a private auction at a discount of 60pc.

Maduro says his government is the victim of an "economic war" led by opposition politicians with the help of the government of US President Donald Trump.

Sanctions levied last year by Washington block US banks and investors from acquiring newly issued Venezuelan debt, effectively preventing the nation from borrowing abroad to bring in new hard currency or refinance existing debt.

According to the document published on Tuesday, the petro will not be a token on the Ethereum network, as was previously disclosed in a whitepaper provided by the government.

Reuters

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