Venezuela’s state-backed cryptocurrency petro has been mired in controversy right from the beginning. Not only did the US Senate took strong objection to it when petro went for a pre-sale, but a section of Venezuela’s own lawmakers have been publicly denouncing it as “illegal.”
Executive Order Bars the ‘Petro’
Adding more to the ongoing controversies, the US government has signed an executive order prohibiting American companies and citizens from dealing in petro.
The executive order reads:
“All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”
The ban, however, is hardly surprising considering that President Trump and his government has been calling the token an institutionalized effort to circumvent US sanctions.
The government in Venezuela, led by President Maduro, has been pitching petro as one of the key instruments to boost the country’s crumbling economy, which has found itself at the receiving end of severe hyperinflation and devaluation for years. Expectedly, President Maduro’s government has reacted strongly to the US move by calling it a “new imperial aggression.”
Venezuelan Petro Supposedly Launched with Russia’s Help
The ban is expected to have serious consequences for Maduro’s ongoing efforts to boost foreign currency reserves. The token was primarily targeted at international buyers as it accepted transactions in US dollar and euro. Because it is illegal for Venezuelan citizens to purchase foreign currencies, petro is inaccessible to the vast majority of the country’s population.
The executive order by President Trump also authorizes Steven Mnuchin, the US Treasury Secretary, to introduce new regulations to ensure its smooth execution. It is worth mentioning here that the Mnuchin’s office issued sanctions on four top Venezuelan government officials earlier in 2018. Furthermore, according to TIME, their sources revealed that Russia had helped the Latin American country with the petro initial coin offering, as part of a multi-pronged strategy to circumvent US sanctions.
“President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course… the Maduro regime is attempting to circumvent sanctions through the petro digital currency,” Mnuchin alleged while imposing the sanction.
Additionally, the Treasury Department also issued a strongly worded advisory for investors urging them to avoid the petro. The advisory stated the digital coin was yet another effort to “prop up Maduro’s regime” at a time when the common masses were suffering due to corrupt and faulty economic policies.
It’s not just the United States; the petro has been struggling to find legitimacy in other countries as well. The Venezuelan government announced earlier this year saying that Poland was interested in trading medicines and food for the petro, a claim that was denied shortly after by the Polish government’s Ministry of Finance and Ministry of Foreign Affairs.