- The cryptocurrency was backed by Venezuela's petrol reserves
- It became embroiled in a corruption scandal
Venezuela is killing the petro cryptocurrency President Nicolas Maduro introduced in 2018 in an attempt to evade US sanctions, among other things. The currency never took off.
It was only tradeable on Patria, a platform which will be closed on January 15 according to a message on its site cited by Barrons. All remaining petros will be converted to the local currency, bolivars.
The petro was backed by petrol reserves
The cryptocurrency was backed by Venezuela's petrol reserves, which are the biggest in the world, and priced at $60 per unit when it launched in February 2018. President Maduro introduced it to "allow new forms of international financing" after facing severe US sanctions.
The problems started
The first problem was that people didn’t understand how to use the petro. Some risk rating institutions pronounced it a scam. Two years later, the president ordered airlines to use petro to pay for fuel in an effort to revive it. Venezuelan police handed out traffic fines in petro, but the crypto couldn’t be used to pay them.
The government mainly used Patria to distribute subsidies. People had to use an auction system to exchange petros for bolivars on the platform.
The final straw
The final straw that broke petro was a corruption scandal in 2023 involving anomalies in the management of funds from oil transactions carried out using cryptocurrency. The scandal resulted in the resignation of Tareck El Aissami, the country’s oil minister, and the arrests of multiple officials, including the top execs of crypto regulator Sunacrip.
The scandal also led to a crackdown on Bitcoin mining in Venezuela, where major cryptocurrencies like Bitcoin are used to protect against devaluation of the local currency and hyperinflation.
Crypto remains popular in Venezuela
Data from a recent survey presented at the UN Conference on Trade and Development shows every tenth Venezuelan owns crypto, compared to just 5% of all people in the UK and just over 8% in the US.
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