Venezuela’s socialist regime will soon launch its own cryptocurrency in a bid to raise hard currency amid an economic and humanitarian crisis that has brought the government to the brink of collapse.
Around 100 million coins, known as “Petros,” each backed by around one barrel worth of crude oil, will be available for pre-purchase on February 20th.
“This is the moment to accelerate the entry of the petro, to have faith in what we’ve created and in the technological and intellectual capacity of our country,” dictator Nicolás Maduro declared on state television. “The petro will have a great impact in how we access foreign currencies for the country and in how we obtain goods and services that we need from around the world.”
In January, Venezuela’s democratically elected National Assembly outlawed the introduction of the “petro” on Tuesday, describing it is an illegal attempt to mortgage the country’s oil reserves, and warned that it could be rendered worthless should Maduro be ousted from power.
“This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” opposition lawmaker Jorge Millan said last month. “It is tailor-made for corruption.”
Maduro first announced the introduction of a national cryptocurrency in December as a solution to the government’s enormous debt burden and the chronic shortage of banknotes, rendered increasingly worthless amid hyperinflation that continues to deplete the value of its Bolivar currency.
However, with an estimated value of $6 billion worth of petros up for sale, the issuance would do little to ease the country’s overall debt burden, which stands closer to $200 billion. A successful raising of funds would more likely be used to provide humanitarian aid, as Maduro’s grip on power continues to weaken as even military loyalists fail to access basic living necessities.
Maduro has also claimed the move will help Venezuela “advance in issues of monetary sovereignty,” principally through the bypassing of economic sanctions imposed by the United States, although critics have also denied this.
“At the end of the day, it’s a coin being issued by the government,” opposition lawmaker Jose Guerra told Bloomberg. “It’s not going to be the means to find financing or avoid sanctions.”
Interest in cryptocurrencies has soared over the past year following the phenomenal rise of the Bitcoin currency, which at one point had a value of over $20,000, but has since dropped by over 20 percent.
Maduro went on to claim that “all the cryptocurrencies of the world have been revalued after Venezuela’s announcements about the creation of the petro.”