Venezuela Abandons Petro Cryptocurrency
Venezuela has officially ended its petro cryptocurrency, which was launched six years ago by President Nicolas Maduro as a way to bypass US sanctions. However, the petro has faced numerous scandals and operational difficulties, leading to its demise. All petro holdings will now be converted into the struggling local currency, the bolivar.
The Petro’s Troubled Journey
The petro was introduced in 2018 with the intention of providing new forms of international financing and overcoming economic sanctions. However, it struggled to gain acceptance and faced skepticism from citizens and risk rating agencies. Despite attempts to increase its usage, such as making it mandatory for state services and airline fuel payments, the petro remained limited to state operations.
Shutdown of Crypto Wallets
Banks in Venezuela were required to display balances in both bolivars and petros, but the practical application of using petros was restricted. The Patria Platform, used for government subsidies, announced the closure of all crypto wallets trading in petro by January 15.
The Final Blow
A corruption scandal involving irregularities in oil operations conducted with crypto assets dealt a significant blow to the petro. This led to the resignation of Petroleum Minister Tareck El Aissami and the arrest of several officials, including those from the Sunacrip crypto regulator. Additionally, Venezuela imposed a temporary ban on crypto mining due to a corruption scheme investigation, resulting in the arrest of around 80 individuals and the disconnection of approximately 75,000 units of mining equipment.
Hot Take: Venezuela Bids Farewell to Petro
Venezuela’s decision to abandon the petro cryptocurrency marks an end to a troubled project that aimed to bypass economic sanctions. Despite initial enthusiasm, the petro faced significant challenges in gaining acceptance and utility. The corruption scandal and mining ban dealt fatal blows to the already struggling cryptocurrency. As a result, all petro holdings will now be converted to the local currency, further highlighting the failure of Maduro’s ambitious project.
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