Petro, Venezuela’s oil-pegged national cryptocurrency, is being considered, along with the Russian ruble, as an alternative medium of exchange in country to country transactions between Venezuela and Russia in place of the commonly-used U.S. dollar.
Jorge Valero, Venezuela’s UN representative, told Russian news site Russia Today that the two countries have engaged in talks regarding the planned switch.
The Petro, released in February 2018, is currently pegged to the price of a barrel of Venezuelan oil. In direct contrast to most other crypto tokens pegged to a single currency, Venezuela’s national currency, the bolivar, is pegged to the price of Petro.
Avoiding U.S. sanctions
Venezuela hopes to use the Petro to avoid sanctions from the U.S. government by disconnecting itself from the U.S. dollar.
“The diplomat stressed that the US penalties against the Venezuelan oil sector, along with freezing its dollar accounts, has had an enormous negative impact on the country’s economy,” wrote Russia Today.
“The measures deprived the Latin American nation of free access to international financial support and investments in its oil sector.”
No real crypto infrastructure
The U.S. Treasury answered Petro’s launch by imposing sanctions against both the Venezuela government and Russian crypto exchange Evrofinance. At the time, the U.S. Treasury claimed that “Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.”
Since Venezuela doesn’t currently have the infrastructure nor the crypto exchanges to facilitate crypto payments on a local level, the move to replace the U.S. dollar with Petro and the ruble in intercountry transactions may not have tangible effects on the country’s local economy.