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Venezuelan Petro Coin: Ill-Fated Cryptocurrency to Fade into Oblivion

Last Updated January 15, 2024 12:46 PM
Teuta Franjkovic
Last Updated January 15, 2024 12:46 PM

Key Takeaways

  • Venezuela’s Petro cryptocurrency is shutting down after failing to achieve widespread adoption. 
  • The project faced a string of setbacks, including a lack of adoption, regulatory issues, and the closure of key exchanges. 
  • The Petro’s collapse underscores the hurdles of national crypto adoption and the need for regulatory safeguards.

Launched in 2018, the Petro (PTR) was introduced as a means for Venezuela to circumvent sanctions imposed by the United States.

Despite this initiative, the cryptocurrency never achieved widespread usage. Now, five years later, on January 15th, Petro is set to cease operations .

Petro Shutdown Confirmed, Government Website Unavailable

The closure of the Petro was reportedly announced on a government-run website  dedicated to the cryptocurrency. However, at the time when this happened, this website was not accessible. 

The administrative section of the Venezuelan Patria website , which was reportedly the only platform for trading the Petro, was only accessible with a password, further complicating access.

The exact number of Venezuelans who actively used the Petro cryptocurrency is not clearly documented. Efforts by the Maduro government to integrate Petro into everyday transactions, such as making it mandatory for airlines to use it for fuel payments and for paying certain state services like passport fees, did not significantly boost its widespread adoption. Its usage remained mostly limited to certain state operations, like tax payments.

For a broader perspective on cryptocurrency adoption in Venezuela, a 2022 survey presented at the United Nations Conference on Trade and Development  indicated that around 10.3 percent of Venezuelans owned some form of cryptocurrency, which is higher than the percentages in the United States and Britain. This statistic, however, encompasses all cryptocurrencies, not just the Petro, reflecting the general interest in digital currencies among Venezuelans, possibly as a response to economic challenges and hyperinflation.

Adoption Hindered by Legal Tender Status, Criminal Ties 

Efforts to promote the use of the Petro within Venezuela encountered significant challenges. Despite these efforts, the Petro was never designated as legal tender , which meant that its acceptance was not obligatory. This lack of mandatory acceptance played a significant role in its limited adoption. Even the Banco de Venezuela, the country’s largest bank, did not accept the Petro, and would only have done so under a direct presidential mandate.

Adding to the Petro’s challenges, in June 2020, the U.S. Immigration and Customs Enforcement (ICE) announced a substantial $5 million bounty for the capture of Joselit Ramirez Camacho . Ramirez Camacho was at the helm of the National Superintendency of Crypto Assets, the governmental body responsible for overseeing the Petro. He was accused of being involved in international narcotics trafficking. 

Joselit Ramirez Camacho, who led the National Superintendency of Crypto Assets overseeing the Petro, was arrested in Venezuela in March 2023 . The charges against him were related to financial misconduct within the national oil industry. Following his arrest, the agency he supervised was initially shut down for reorganization. This closure was subsequently extended through March 2024. The investigation into the agency led to further actions, including the shutdown of cryptocurrency exchanges and mining operations in Venezuela.

Underscoring Differences between State-Backed and CBDCs

The Petro, an oil-backed state-run cryptocurrency, was introduced following a significant devaluation of Venezuela’s fiat currency, the bolivar. This devaluation was a consequence of U.S. sanctions  and occurred amidst Bitcoin’s growing popularity in the country. The creation of the Petro was ordered by Venezuelan President Nicolas Maduro, despite opposition from the country’s parliament.

The project reached full operational capacity in 2020 but failed to gain traction in international markets. The Maduro government had attempted to promote its use among the 10 member states of the Bolivarian Alliance for the Peoples of Our America, but these efforts did not result in widespread adoption or trading outside of Venezuela. 

It’s important to note that the Petro was not a central bank digital currency (CBDC). In 2021, the Central Bank of Venezuela had announced intentions to create a CBDC , but these plans did not materialize. The distinction between the Petro and a CBDC is significant. While the Petro was a state-backed cryptocurrency, a CBDC would be a digital form of a country’s fiat currency, issued and regulated by its central bank.

This difference in structure and regulatory oversight might have impacted the adoption and operational challenges faced by the Petro. The series of events around the Petro, from its troubled inception to its eventual demise, highlights the complexities of introducing and managing state-sponsored digital currencies, particularly in a volatile economic and political environment.

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