According to Bloomberg News, Venezuela plans on bolstering its Petro cryptocurrency by accepting it as a form of payment for fees and taxes, using it in international business, and encouraging its use through tax incentives.. The plan will also include paying public workers in the cryptocurrency.
Notably, Bloomberg revealed that out of the 100 million Petros Venezuelan president Nicolás Maduro ordered, about 38 million will go to institutional investors in a month-long presale, that’s set to begin on February 15, which officials expect to bring in $1.3 billion. Then, a token sale for the general public will be held, and 44 million Petros will be sold to bring in an estimated additional $2.4 billion. The remaining 18 million Petros will go to a panel of advisers who helped the country with the token, and to the government.
The Petro, as previously covered by CCN, is an oil-backed cryptocurrency, meaning each token will be backed by one barrel of Venezuelan crude. Tellingly, the coins can’t be exchanged for the actual oil. Each Petro is set to be divisible by 100 million units, with the minimum unit being called the mene, according to a draft proposal.
Little over half of the funds collected from the token sale will go to a sovereign fund, while the rest will be used to support the cryptocurrency’s infrastructure and other technological projects. Venezuela will reportedly guarantee buyers the cryptocurrency will be used to pay for fees and taxes, and to conduct international business, primarily related to oil.
The tokens will be exchangeable for fiat currency, which will potentially help relieve the dollar shortage in the country. Per Bloomberg, the bolivar went down 3,400% against the dollar last year, while this month it went down an additional 72%. The currency is now being bypassed by even small shop owners, who are increasingly demanding payments in foreign currencies.
Attempt to escape the recession
Venezuela is currently crippled by one of the world’s deepest recessions. It’s suffering from a shortage of hard currency, and U.S. sanctions against the country cut off traditional financing options.
Things in the country have gotten to the point Venezuelans had to use bitcoin and other cryptocurrencies to survive the government’s failures. Per Bloomberg, the country and its state oil company are now behind on over $1.5 billion in bond payments.
Earlier this week, Venezuelan leader Nicolás Maduro stated:
“Imperialism intends to drown us, to follow our bank accounts and transactions, to block our oil. This is a big bet we’re making for the stability and financial growth of our country.”
The opposition-run Venezuelan congress recently outlawed Maduro’s Preto as an “illegal and unconstitutional” instrument, as it is seen as an “effort to illegally mortgage” Venezuela’s oil reserves.
The Venezuelan Parliament’s legislator, Jorge Milan, stated:
“This is not a cryptocurrency, this is a forward sale of Venezuelan oil. It is tailor-made for corruption
Meanwhile, Maduro is pitching the cryptocurrency to Qatar, in an attempt to gain the latter as an early investor. This, after bullishly announcing the superintendence of the Petro by setting up a separate body to “govern” the cryptocurrency and its transactions.