Venezuela: Possible Cryptocurrency Adoption – Is it a Solution to Bypass International Sanctions?

Venezuela’s financial well-being is leaning more towards the use of cryptocurrency. Purportedly, the Central Bank of Venezuela is considering the storage of cryptocurrency in its coffers. 

In a report, four anonymous individuals provided information that the Venezuelan Bank is carrying out an investigation to determine their capability to hold cryptocurrency. This consideration arises from a request by Petroleos de Venezuela SA (PSDV). This body is the country’s state-owned oil and natural gas company. The firm desires to send Bitcoin and Ethereum to the central bank after which it would pay oil company suppliers via crypto. 

The question of how PSDV came to own Bitcoin and Ethereum remains a mystery. This said it is easier to understand why selling its digital currency in the open market raises a challenge. 

Selling cryptocurrency on the open market will require PDVSA to register with an exchange. This move will push the company into due diligence. As a means to counter this ideology, the company wants the central bank to use either Bitcoin or Ethereum to pay suppliers they owe. 

Could Cryptocurrency Salvage the Financial State of Venezuela?

Venezuela has been facing financial breakdowns associated with political instability with sanctions hitting the country from every corner. Many countries are not financially or socially associating with the country’s activities. 

Venezuela, an oil producer, is struggling to obtain payment from customers through conventional channels.  This struggle is increasing as more countries, and business entities hesitate to transact business with a sanctioned entity (Venezuela).

Bitcoin and Ethereum use blockchain technology to verify and record transactions. The added advantage of using blockchain is the presence of anonymity and the absence of an intermediary. Also, it is not governed by a specific country. 

Practically, with a growing increase in the number of international sanctions, embracing cryptocurrency may provide a solution for Venezuela. It may be the answer in an attempt to fully participate in the global financial system and bypass the sanctions. 

Despite the volatility of cryptocurrency, Venezuela stands to benefit from its use. The country will be able to transact anonymously as well as make and receive payments without the use of an intermediary.