Venezuela’s state-backed cryptocurrency, the Petro, is a “half-hidden joint venture” between Venezuelan and Russian officials and businessmen, according to a new report by Time. The Petro, which first went on presale on February 20th, is the world’s first state-backed cryptocurrency.
Its value is tied to the country’s oil reserves. Sources told Time that the aim of the petro was to erode the power of US sanctions. Venezuelan president Nicolás Maduro has previously referred to the Petro as “kryptonite” and the US government as “Superman.”
An executive at a Russian state bank told Time that senior advisers in the Kremlin oversaw the development of the Petro and that Russian president Vladimir Putin signed off on the project in 2017. “People close to Putin, they told him this is how to avoid the sanctions. This is how the whole thing started. ” the executive told Time.
Trump prohibiting US citizens from purchasing the petro
Earlier this week, the Trump administration issued an executive order prohibiting US citizens from purchasing the Petro. Maduro hopes will raise $6 billion and help shore up the country’s failing economy. Venezuela’s currency, the bolívar, has suffered from hyperinflation as a result of government mismanagement and US sanctions. The US has also frozen assets of four current and former officials of the Venezuelan government.
Treasury Secretary Steven Mnuchin said in a statement on Monday:
“President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course to avoid further catastrophe, the Maduro regime is attempting to circumvent sanctions through the Petro digital currency — a ploy that Venezuela’s democratically-elected National Assembly has denounced and Treasury has cautioned US persons to avoid.”
Cryptocurrencies could be an effective form of skirting sanctions. Time reports that Russia floated the idea of creating a digital version of the ruble, but Russia’s central bank said it would risk destabilizing the ruble itself.
“So Russia made its stronghold here in Venezuela,” Armando Armas, an opposition member of Venezuela’s parliament, the National Assembly told Time. “Now they are using Venezuela as a guinea pig for their experiment.”