Cryptocurrencies have immense potential for several reasons. As we all know, digital assets are seen as investment products or assets that can help them get rich quickly. However, there also seems to be significant growth in those who see actual use cases for these assets.
Initially, the crypto believers who saw them as useful financial and economic tools began as private individuals and companies. However, countries have made significant moves into crypto as well. In the line of crypto-loving countries, hardly has any been more bullish than Venezuela.
Crypto for Evading Sanctions
Venezuela's relationship with cryptocurrencies was born out of a matter of necessity. The country has been under significant economic sanctions from the United States and the international community, and these sanctions had rocked its economy. Seeing no way out, the government essentially jumped on the crypto bandwagon.
However, what seemed to have been a fad now looks to be legit and here to stay. Under President Nicolas Maduro's leadership, Venezuela is becoming one of the world's most crypto-friendly countries and is significantly ramping up its adoption.
This week, Maduro claimed in an interview that he planned to shift the Venezuelan economy to an entirely digitized format soon. Per a Bloomberg article, the President explained last week that Venezuela has been under the severe effects of the United States' sanctions for so long. This year, the government now plans to use crypto as an escape route.
Maduro added that the shift would transition the Venezuelan economy to a fully digital one, with cash disappearing from the country in its entirety.
This isn't the first time Maduro will praise crypto and its seeming ability to lift the Venezuelan economy out of hardships. In September, the President presented a bill intended to help Venezuela overcome the U.S. sanctions' impacts. As part of the bill, the government committed to studying the possibility of using different cryptocurrencies to facilitate domestic and international trade.
"The anti-sanctions bill is the first response [...] to give new strength to the use of Petro and other cryptocurrencies, national and global, in domestic and foreign trade, so that all cryptocurrencies of the world, state and private, could be used. This is an important project that is under development."
At the time, online reports claimed that the National Constituent Assembly, Venezuela's legislative body, had begun reviewing the bill. However, there hasn't been any word about it yet. It appears that the legislation will play a significant role in Maduro's plans for this year.
As part of Maduro's anti-sanctions play, the Venezuelan government shocked the world when it announced Petro, a stablecoin, in 2018. At the time, the asset was said to have been backed by Venezuela's oil reserves. Along with helping Venezuela evade economic sanctions, the Petro was also designed to attract Venezuela’s foreign investment. However, that has not been easy since the asset isn't available anywhere outside Venezuela.
In Venezuela, however, the adoption of the Petro has been impressive. The asset has been a primary fixture in several government endeavors, with Maduro essentially pushing everyone to accept it in one way or the other. In late 2018, Caracas Chronicles reported that the government had converted monthly bonuses for local pensioners to Petro.
The government made a similar move in 2019, with Maduro announcing that they would pay Christmas bonuses for pensioners and retirees in Petro. Several other government initiatives have worked around Petro, and Maduro has also forced banks and businesses to collect the asset as payment from customers.
Clearly, Maduro is moving significantly to ensure that Petro becomes a cornerstone of the Venezuelan economy.
Support for Traditional Cryptocurrencies is Still Strong
It is worth noting that Petro isn't the only cryptocurrency. As explained, Petro had a pretty difficult time getting traction when it first launched. Till today, the asset remains unavailable and virtually worthless outside Venezuela.
To fill that gap, the Maduro administration has relied heavily on Bitcoin. The country has used Bitcoin for airfare payments and other expenses, and it is now applying the leading cryptocurrency in trade operations.
Last month, RunRun.es, an investigative platform, reported that Venezuela is looking to increase its use of Bitcoin for facilitating imports. This way, it would bypass trade restrictions from the United States and the international community. Citing anonymous sources, the report claimed that companies in nations like Turkey and Iran had been making payments for imports in Bitcoin to Venezuela.
With Petro still developing in and out of Venezuela, there is a significant chance that the Maduro administration will continue with its Bitcoin dependency.
Plans in Motion
Venezuela has also been building the right infrastructure to help with effective crypto adoption. Last October, the country's National Securities Superintendency reportedly gave the green light for a 90-day pilot of a "decentralized stock exchange." The crypto-powered platform, known as the Decentralized Stock Exchange of Venezuela (BDVE), will reportedly allow users to access its services from anywhere without restrictions.
BDVE will support trading for "alternative digital assets" and fiat currencies. The platform's operating manual also showed that it would trade ERC-721 and ERC-223 tokens. While it doesn't note anything about Ether, the use of these tokens suggests that the exchange might have been built on the Ethereum blockchain.
The BDVE might be Venezuela's chance to finally get Petro beyond its shores and in the hands of foreign investors. With no restrictions from the United States and others, Maduro just might be able to get his dream of digitizing the Venezuelan economy entirely.