Date
17 July 2018
Venezuela's President Nicolas Maduro is hoping cryptocurrencies will help Venezuela skirt US financial sanctions as it struggles under hyperinflation and a collapsing socialist economy. Photo: AFP
Venezuela's President Nicolas Maduro is hoping cryptocurrencies will help Venezuela skirt US financial sanctions as it struggles under hyperinflation and a collapsing socialist economy. Photo: AFP

US bans transactions with Venezuela’s digital currency

US President Donald Trump signed an executive order barring any US-based financial transactions involving Venezuela’s new petro cryptocurrency, as US officials warned that it was a “scam” by President Nicolas Maduro’s government to further undermine democracy in the OPEC country.

“The ‘petro’ is a desperate effort by a corrupt regime to defraud international investors,” a senior US administration official told reporters, strongly warning that any transactions in the petro digital currency would violate US sanctions, Reuters reports.

“Investing in the ‘petro’ should be viewed as directly supporting this dictatorship and its attempts to undermine the democratic order in Venezuela,” the official added.

Trump’s order bars “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,” issued by Venezuela’s government since Jan. 9, the White House said in a statement on Monday.

Maduro is hoping cryptocurrencies will help Venezuela skirt US financial sanctions as it struggles under hyperinflation and a collapsing socialist economy.

Venezuela rejected the sanctions, which it says are illegal under international law.

“These unilateral sanctions … constitute a new imperial aggression aimed at intensifying the attack on our people,” the government said in a statement.

The order comes as the Trump administration is actively exploring options to sanction Venezuela’s oil sector.

On Feb. 20, Maduro said the newly launched oil-backed petro cryptocurrency raised US$735 million in the first day of a pre-sale. Maduro also said last month Venezuela is preparing a new cryptocurrency called “petro gold” that will be backed by precious metals.

Any US transactions of the Venezuelan petro conducted before Monday’s order would be considered on a case-by-case basis, a second US administration official said.

“We would base our licensing determinations on the facts and circumstances of those particular applications,” the second official added.

The US is considered a crucial source of capital for securities and tokens because of the size of its economy and because many global financial operations at some point pass through US financial institutions.

In addition, the US Treasury announced sanctions against four Venezuelan government officials for corruption and economic mismanagement.

The senior administration official said the sanctions against the four officials were not directly linked to the cryptocurrencies issue.

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CG

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