Venezuela Ends Controversial Petro Cryptocurrency
Venezuela has officially terminated its petro cryptocurrency, which was launched by President Nicolas Maduro six years ago to bypass US sanctions. The petro has been plagued by scandals and operational challenges, leading to its demise. All petro holdings will be converted to the nation’s struggling local currency, the bolivar.
Venezuela Calls It Quits on Petro Project
In February 2018, Venezuela introduced the petro as a tool for new forms of international financing and to escape economic sanctions imposed by the US. However, the cryptocurrency faced difficulties in gaining acceptance and utility. It was considered confusing by citizens and labeled a scam by risk rating agencies. Despite attempts to increase usage, such as mandating its use for state services and airline fuel payments, the petro remained limited to certain state operations.
The Final Blow
A corruption scandal involving irregularities in oil operations conducted with crypto assets dealt a final blow to the petro. This led to the resignation of the Petroleum Minister and the detention of officials from the Sunacrip crypto regulator. Additionally, Venezuela imposed a temporary ban on crypto mining due to a corruption scheme investigation, resulting in numerous arrests and impacting the industry. Around 75,000 units of mining equipment have been disconnected as a result.
Hot Take: Venezuela’s Troubled Petro Experiment Comes to an End
Venezuela’s ambitious petro cryptocurrency project has come to an end after facing numerous challenges and scandals. Launched as a means to circumvent US sanctions, the petro struggled to gain credibility and widespread acceptance. Despite efforts to boost its usage, including mandates for state service payments, it remained largely confined to limited state operations. A corruption scandal involving oil operations conducted with crypto assets dealt a final blow to the petro, leading to its termination. Furthermore, Venezuela’s temporary ban on crypto mining has disrupted the industry and resulted in numerous arrests. The petro experiment serves as a cautionary tale for countries considering their own state-backed cryptocurrencies.
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