VENEZUELA BOOSTS CRYPTO USE AMID REIMPOSED US OIL SANCTIONS 

In response to the reinstatement of U.S. oil sanctions, Venezuela is increasingly relying on cryptocurrency, specifically USDT, to facilitate transactions in its oil and gas sectors.

Venezuela’s national oil company, PDVSA, has been integrating USDT into its operations since 2023 and is now ramping up this practice. The company has implemented a policy requiring new customers to possess a digital wallet with cryptocurrency holdings.

Venezuela Increases Use of USDT in Oil Trade

A Reuters report indicates that PDVSA’s push to expand the use of USDT for exporting crude and fuel was prompted by the U.S. government’s decision not to renew a general license that had temporarily eased sanctions. This license was initially granted in October following President Nicolás Maduro’s pledge to conduct a free and fair election in 2024. During the license period, Venezuela’s oil exports surged to 900,000 barrels per day in March, the highest in four years.

However, the U.S. has accused the Maduro government of not fulfilling its election promise, leading to a non-renewal of the license and a reintroduction of sanctions. Consequently, PDVSA’s customers and suppliers have until May 31 to conclude their transactions, complicating Venezuela’s ability to export oil.

To mitigate the impact of these sanctions and avoid having profits frozen in foreign bank accounts, PDVSA began requiring prepayment of half the value of each oil cargo in USDT in early 2024. The company has also mandated that both new and existing customers adopt digital wallets to facilitate these transactions.

Cryptocurrency as a Sanction Circumvention Tool

Using crypto in the oil and gas industry is notably unconventional, as the U.S. dollar remains the preferred currency for global oil trading. According to one trader who spoke to Reuters, implementing USDT transactions involves intermediaries since direct crypto transactions are generally not compliant with trade regulations.

While relying on intermediaries allows PDVSA to bypass sanctions, it also means reduced revenue from oil sales.

Venezuela has previously attempted to use cryptocurrency to evade U.S. sanctions. In 2018, the government launched Petro, an oil-backed state cryptocurrency. However, Petro faced significant criticism and failed to achieve widespread acceptance. Reports from January 2024 suggest that the Venezuelan government has discontinued the Petro project.

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