Nicolas Maduro, Petro, Crypto
Venezuela’s President Nicolas Maduro and his wife Cilia Flores participate in the process of buying Petro, the cryptocurrency developed by the Venezuelan government, in Caracas, Venezuela November 6, 2018. | Source: Miraflores Palace/Handout via REUTERS

Venezuela’s President Nicolas Maduro has openly declared his regime’s love for cryptocurrencies like Bitcoin and Ethereum.

The controversial politician on Tuesday said his government is using cryptocurrencies to access national and international payment infrastructure. He confirmed that Venezuela’s finance minister and central bank are close to introducing “new instruments.” It would give every Venezuelan access to “national and international payments through the central bank’s accounts.”

Dwindling US Dollar Reserves

The statements came a week after Bloomberg reported Venezuela’s central bank’s interest in cryptocurrencies. According to the sources cited by the New York media house, the bank is running tests to determine whether or not they can keep non-sovereign assets like bitcoin and ethereum in its reserves. The works appear at the request of Petroleos de Venezuela SA (PDVSA), a state-run oil company, which is looking to conduct its financial operations with the central bank and its offshore suppliers in cryptocurrencies.

US sanctions on Venezuela has choked the country’s global financial pipelines. The Latin American territory now stands isolated from the international finance system, worsening one of the world’s worst humanitarian and economic crisis. That is now forcing the Venezuelan officials to look for patchwork-alternatives.

bitcoin, ethereum, venezuela
Venezuela’s international reserves (US dollars) | Source: Bloomberg

Earlier, Maduro attempted to damage-control the situation by launching the world’s first sovereign crypto, the Petro, a currency that would flow independently across borders via an independent blockchain protocol. Nevertheless, the experiment failed. That led the President to explore solutions in decentralized cryptocurrencies like bitcoin as a tunnel to funnel funds globally.

“Donald Trump and his sanctions are blocking Venezuela from carrying out transactions in any of the world’s banks,” Maduro said. “There are other formulas to pay, and it’s what we’re using because our payment system works perfectly in China and Russia.”

A Desperate Move

Opposition leader Juan Guaidó, who received recognition from more than 60 countries for his claim on Venezuela’s presidential chair, called Maduro regime’s move an act of desperation, fearing it would boost Venezuela’s already worsening economic crisis.

“The regime’s use of cryptocurrency shows desperation,” said Guaido in an earlier press conference. “To resort to that kind of subterfuge emphasizes the economic crisis the regime is going through.”

On the other hand, thinktanks within the cryptocurrency space believe Venezuela’s open flirting with bitcoin is bad news. Market analyst Alex Krüger said the US would increase its crackdown on bitcoin as a “national security issue.”

On the other hand, Morgan Creek Digital Asset’s co-founder Anthony Pompliano believes other central banks would follow Venezuela. He said they would start holding bitcoin in their reserves in the future.

“Just a matter of time before the game theory kicks in,” Pompliano added.

This article was edited by Samburaj Das.