The Government of Venezuela is reportedly taking pensioners' bolivars from their accounts and replacing them with their cryptocurrency, the Petro.
According to Caracas Chronicles, the elderly residents recently received their monthly pensions in Venezuela's official currency. Their wallet service, dubbed as Motherland, sent a notification that their accounts were credited with 1,800 Bolivars. However, the pensioners received another similar information from Motherland on the same day, stating that their account was now credited with the Petro.
Notably, the government took out pensioners' Bolivars without their consent, repackaged it into Petro, and returned it to their wallets. Understanding that pensioners live solely on these bonuses, and they are already equipped with the process of withdrawing them through a simple bank transfer process, handling them with Petro units have made things difficult.
Caracas Chronicles argued that Petro cryptocurrency is unspendable at banks, meaning elderlies would not be able to exchange them as quickly as they used the Bolivar. There is, however, a complex process of converting the Petro units back to Bolivar. What's further worse is that the value of Bolivar is not accurately pegged to the Petro. The Petro-to-bolivar exchange rate has surged 66.5% in the past two weeks.
"This must be a new form of the dictator’s erotic fantasy and wet dream: full control over citizens’ finances. They could take money when they feel like it, erase it, transfer it, you name it," the financial blog stated.
There are also doubts whether or not real assets sufficiently back Petro. The government claims that the total supply of the Mineral Resources-backed cryptocurrency equals up to $6 billion, but they didn't provide any detailed audit that highlights the sum and source of the valuation.
Venezuela's president Nicolas Maduro, nevertheless, has pledged to expand the use of Petro in every government initiative in the country. He announced in August that their government would deploy the cryptocurrency in the pension sector, followed by a ruling that residents will have to pay for their passport fee using Petro. He now plans to enable government institutions to pay their employees in Petro too.
US President Donald Trump ordered prohibition on the use of Venezuela-backed cryptocurrency by their citizens, after finding that it was against the sanctions the US has put on the South American nation. Economists rejected Petro for lacking the quality of a state-backed national currency, believing that it would further dig the economic pothole for Venezuela by making Bolivar more hyperinflated than ever.
Steve Hanke, for instance, straightforwardly called Petro a sham, saying that it doesn't exist.
No internationally-recognized financial body has come out in support of Venezuela's cryptocurrency plans.
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