Venezuela sells its oil in crypto

Once again sanctioned by the United States, Venezuela is increasingly turning to cryptocurrencies such as stablecoins or bitcoin.

Petrocrypto

Venezuelan state oil company PDVSA plans to increase the use of cryptocurrencies for its oil exports.

This decision comes as the United States has just reimposed sanctions that have crippled the country's oil industry since 2017.

Once one of the world's main producers, Venezuela has seen its production collapse, falling from nearly 3 million barrels per day in 2014 to less than 400,000 b/d in 2020. The reason is the “maximum pressure” sanctions. » of the Trump era aimed at overthrowing President Maduro.

Thanks to the temporary lifting of sanctions in October, Venezuela was able to increase production to an average of just over 800,000 b/d in the first quarter. Sanctions relief also allowed Venezuela to sell its oil without having to resort to the costly black market.

The return of sanctions will force Caracas to use cryptocurrencies more to facilitate payments. And in particular USDT (Tether), a stablecoin backed by the dollar.

Note that the American oil company Chevron is the only one authorized to do business with Venezuela. Other companies like Total will have to wait for possible American authorization.

And why not bitcoin?

The return of oil sanctions means that bank accounts housing proceeds from oil sales in dollars could be frozen. PDVSA is therefore increasingly selling its oil in USDT.

It is a stablecoin whose value is indexed to that of the dollar. A stablecoin is a cryptocurrency designed to maintain parity with a national currency.

That said, USDT is not censorship resistant like bitcoin is. Tether is implemented by an American company which may have to freeze USDT. This has already happened.

“We have different currencies, depending on what is stipulated in the contracts”, said Venezuelan Oil Minister Pedro Tellechea. The minister told Reuters that digital currencies could be the preferred payment method in certain contracts.

Venezuela is probably reluctant to adopt bitcoin because its imports mainly come from China (31%) and the United States (23%). So many countries will not accept bitcoin as payment anytime soon.

However, Venezuela exports a lot to Turkey (14%) where bitcoin is on the rise. In fact, more than half of Turks aged 18 to 60 hold cryptocurrencies. This is what emerges from report on Turkey from the KuCoin exchange exchange.

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