Venezuela launches national cryptocurrency, releases 100 million digital tokens

Nicolas Maduro Venezuela's president addresses members of the media during a press event in Caracas Venezuela

Nicolas Maduro Venezuela's president addresses members of the media during a press event in Caracas Venezuela

Though the Petro's value is tied to crude oil, it doesn't actually translate to ownership of any concrete assets.

The launch of the so-called cryptocurrency comes as Venezuela faces deepening economic and political crises.

"They have been trying to figure out ways to get around anti-money laundering sanctions provisions, and crypto is maybe one way they can do that", Venezuelan journalist Francisco Toro told CNBC.

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

Meanwhile, consulting firm Eurasia Group estimates that although Venezuela could raise some US$2 billion in the initial offer, it is "unlikely" that the Petro will be established as "a credible means of exchange", beyond short-term "interest".

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"My advice would be to tread very carefully with this especially considering the track record of the Venezuelan government", said Federico Bond, co-founder of Signatura, a digital startup based in Argentina. The government has been in default on some of its debt since November. President Trump and several other Western leaders call Maduro's regime a dictatorship.

To fuel demand for the Petro, it will be accepted as payment for local taxes. Opposition leaders have said the sale constitutes an illegal debt issuance that circumvents Venezuela's majority-opposition legislature, and the U.S. Treasury Department has warned it may violate sanctions levied previous year. Senators from the US have also raised concerns about the expressed plan to avoid sanctions through the cryptocurrency's use, though how that will play out in practice remains to be seen.

The "Petro" was released for pre-sale to invited investors at midnight on Tuesday February 20th. For now, investors have to buy it with other world currencies.

In a further potential blow to the opposition, a senior official in the ruling socialist party proposed early elections for Venezuela's opposition-controlled congress as well, cutting its term short by more than a year.

Diosdado Cabello, vice president of Venezuela's ruling Socialist Party, on Tuesday proposed holding an early congressional election alongside the April 22 presidential vote, potentially shortening the tenure of the now opposition-run legislature. Some warn abstention would be a mistake, ceding power to Maduro unchallenged for another six-year term. Also on Tuesday, speaking from a United Nations forum on human rights in Geneva focusing on the Venezuelan crisis, Organization of American States Secretary General Luis Almagro demanded “broader and stronger” sanctions against the Maduro regime, which he again accused of being “a threat for global peace and security”.

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