The president of Venezuela, Nicolas Maduro, says that the country’s government is now looking at diverse cryptocurrencies as a potential way of avoiding sanctions.
On Sept. 29, Maduro presented a new bill that intends to help the country overcome the impact of United States sanctions.
As part of the bill, Venezuela will study the possibility of using various cryptocurrencies in both domestic and foreign trade. Maduro claimed that the new anti-sanctions bill involves both private and state-backed crypto initiatives like Venezuela’s oil-pegged cryptocurrency, the Petro:
“The anti-sanctions bill is the first response […] to give new strength to the use of Petro and other cryptocurrencies, national and global, in domestic and foreign trade, so that all cryptocurrencies of the world, state and private, could be used. This is an important project that is under development.”
According to online reports, the new bill is now being reviewed by Venezuela’s legislative body, the National Constituent Assembly.
The latest news apparently demonstrates that Venezuela’s crypto interest is not limited to the country’s national cryptocurrency, the Petro, which has been positioned as a major tool to evade U.S. sanctions.
Maduro’s new claims came shortly after Venezuela’s government issued an official regulatory framework for mining of cryptocurrencies like Bitcoin (BTC). On Sept. 23, Venezuela’s National Superintendency of Crypto Assets and Related Activities issued the first decree to regulate all crypto mining activities, outlining specific requirements for miners such as an obligation to join the so-called “national mining pool.”
As Cointelegraph previously reported, Maduro used to support no cryptos other than the state Petro.
In late 2019, Maduro announced that the country’s retirees and pensioners will be paid their Christmas bonuses in Petro. The Venezuelan government reportedly turned pensioners’ monthly bonus into the Petro in late 2018.
Officially rolled out in February 2018, the Petro became the world’s first national oil-baked cryptocurrency. The coin is purportedly designed to attract foreign investment as well as avoid sanctions by the U.S. government. However, the token is not available for purchase anywhere outside of Venezuela.
Venezuela Trials ‘Decentralized Stock Exchange’ That’s Open To The World
Venezuela has announced a 90-day trial for a decentralized stock exchange supporting “alternative digital assets” and fiat currencies.
Venezuela’s National Securities Superintendency has given the go-ahead for a 90-day pilot of a crypto-powered “decentralized stock exchange” in the country that aims to have a global reach despite international sanctions.
Cointelegraph Espanol reports that news of the Decentralized Stock Exchange of Venezuela’s authorization to operate was published in the country’s official gazette, issue 6,578, Sept. 29.
The exchange is known as BDVE and its website claims that the platform comprises “the first decentralized stock exchange in the world.” It highlights that users will be able to access the exchange “from anywhere in the world” and “without restrictions.” Both fiat currencies and “alternative digital assets” will be traded on BDVE.
“[BDVE] represents a new and innovative segment of the stock market, which, with the use of new information and communication technologies, provides the investor with security and control over its financial assets.”
The local securities watchdog will determine whether the exchange will be granted a license to continue trading after the 90-day trial is over.
The platform’s operating manual notes that the securities traded on the platform will comprise ERC-223 or ERC-721 tokens, or a third “packable” token. While the document does not contain the word Ethereum, use of the popular Ethereum (ETH) token standards suggests that the platform may be built on Ethereum.
Surprisingly, the manual does not mention whether Venezuela’s oil-backed national cryptocurrency El Petro will be utilized by the exchange.
Venezuelan President Nicolas Maduro announced on the same day a new “anti-sanctions bill” intended to mitigate the impact of economic sanctions imposed by the United States.
The bill, which is currently being reviewed by Venezuela’s National Constituent Assembly, noted that both private and state-backed crypto assets could be used to conduct trade beyond the reach of U.S. sanctions.
Venezuelan Army Starts Mining Bitcoin To Make Ends Meet
The Venezuelan army turns to crypto mining as the country’s economy collapses.
The regime of Nicolás Maduro continues to lean on crypto to keep economically solvent.
Via Instagram, an engineering brigade of the Venezuelan army inaugurated the new “Digital Assets Production Center of the Bolivarian Army of Venezuela.” As the video shows, the center houses various ASIC mining equipment used to crack proof-of-work algorithms.
General Lenin Herrera presented the new mining operation. The stated goal of the mining operation is “strengthening and self-sustainability of our units of the Bolivarian Army,” adding later that these mining centers would be generating “unblockable sources of income” and an alternative to the “trust system blocked and controlled by colonialist interests,” referring to the United States, a country that has leveled sanctions against many associates of the Maduro regime.
With oil prices crashing and political turmoil taking its toll even before COVID-19, Venezuela has seen historic inflation in recent months.
As Cointelegraph reported in September, Maduro proposed an “Anti-Blocks Law,” a legal body that proposes using cryptocurrencies to evade sanctions and access financing from international allies.
These intentions are not new. The Maduro administration has gone so far as to launch and promote its own cryptocurrency, the Petro, which has seen limited success.
On the flip side, the U.S. military is also closely observing Venezuela’s crypto activities. Recently, Admiral Craig Stephen Faller referred to Maduro’s use of crypto and went so far as to link its use to drug trafficking and terrorism, adding that the armed forces were keeping an eye on all such operations.
Venezuela Ramps Up Bitcoin Payments For Imports From Iran And Turkey
Venezuela President Nicolás Maduro claims the country will “use all the cryptocurrencies in the world” to bypass U.S. sanctions.
According to an investigative report from RunRun.es, Venezuela intends to increase its use of Bitcoin to pay for imports to bypass financial sanctions imposed by the United States.
RunRun.es, which was founded by Venezuelan investigative journalist Nelson Bocaranda, cited anonymous sources from the country’s central bank who claim that “payments to companies from allied countries such as Iran and Turkey have been made using Bitcoin.”
It is unclear, what these imports consist of, however, Turkey and Iran currently provide the country food and fuel in exchange for gold.
Venezuela President Nicolás Maduro’s government has promoted its state-issued, purportedly oil-backed ‘Petro’ cryptocurrency as a means of exchange both internationally and domestically since launching the token in 2018. However poor adoption of the Petro has forced the regime to explore other crypto assets including Bitcoin and Ethereum.
Maduro began to publicly threaten the use of Bitcoin and other crypto assets as a means to bypass sanctions in September, proclaiming his administration would soon “use all the cryptocurrencies in the world, public, state, or private, for internal and external trade.”
On Oct. 8, Venezuela’s National Assembly passed the Anti-Blockade Law, granting further executive powers to circumvent sanctions imposed on the country, including to authorize the creation or use of any crypto asset as a monetary instrument.
The Venezuelan government established its “Digital Assets Production Center”, a Bitcoin mining warehouse in November, as the country increased its reliance on cryptocurrencies.
Last week the Venezuelan government launched its cryptocurrency exchange, backed by the National Cryptoactive Superintendency, to allow citizens to exchange Bolivars for Bitcoin.
Iran has also put into action a law to use Bitcoin to pay for imports, in an effort to reduce pressure on the country’s already fragile economy.
Mexico Inflation Surges Beyond Ceiling Ahead of Rate Meeting
A sharp spike in Mexico’s inflation is leading economists to change their bets ahead of Thursday’s central bank monetary policy decision, after they had earlier predicted a rate cut.
Consumer prices in the first two weeks of March increased 4.12% from the same period a year earlier, up from 3.68% in late February, the national statistics institute reported on its website Wednesday. The figure, boosted by fuel prices, came in above the 3.9% median estimate of analysts surveyed by Bloomberg.
Nearly half of the 23 economists surveyed by Bloomberg News before the inflation print were expecting the central bank, known as Banxico, to cut rates for a 13th time since August 2019.
“It seems very difficult for them to cut now,” said Janneth Quiroz Zamora, an economist at Monex Casa de Bolsa who had predicted a quarter-point cut. Barclays Plc and Pantheon Macroeconomics both also changed their calls from a small cut to a hold.
Mexico’s swap curve steepened sharply after Wednesday’s inflation numbers. Traders now price about 80 basis points in rate hikes by the end of the year.
Banxico unanimously voted to resume its easing cycle in February, cutting interest rates by a quarter of a percentage point. Mexico’s economy shrank 8.2% last year, the most in almost a century, and the bank’s easing has provided the only substantial form of economic stimulus during the crisis.
Core prices, which exclude volatile items like fuel, rose to 4.09% versus the previous year and climbed 0.35% compared to February, above expectations of 0.2%.
The central bank targets inflation at 3%, plus or minus 1 percentage point.
The bank could still cut again in the second half of the year if inflation comes under control and the Federal Reserve maintains expectations that it won’t hike its own rate until 2023, said Marco Oviedo, chief Latin America Economist at Barclays.
Fuel prices led the gains in the inflation index, rising 9.45% year-on-year. Cooking gas prices rose 4.05% versus February.
Exploring Venezuela’s Crypto Ecosystem Since The Start Of The Pandemic
Here are the events that marked the past year in the Venezuelan crypto space and the opinions of those who experienced them from the inside.
In the year since the COVID-19 pandemic first disrupted almost every aspect of our lives, many things have happened within the crypto ecosystem around the world. So, what has the past year been like for crypto in Venezuela?
Even before 2020, Venezuela already had a number of businesses that accepted various cryptocurrencies as payment; however, considerably more have moved to adopt this form of payment over the past year.
This includes everything from the hotel sector to famous pizza chain Pizza Hut announcing that it will accept Bitcoin (BTC), Litecoin (LTC), Dash and other cryptocurrencies as a form of payment.
Halfway through 2020, crypto exchange Cryptobuyer and payments processor Mega Soft announced that they would form an alliance to allow some 20,000 merchants that use their services to accept payments in crypto through the Cryptobuyer Pay solution developed by the exchange.
Another important landmark was in September 2020 when a Bitcoin node was connected to Blockstream’s satellite network — a first for Venezuela. The result of a joint effort between Cryptobuyer and crypto education provider AnibalCripto, the node was launched despite the logistical limitations imposed by COVID-19-related lockdown measures.
Likewise, those responsible for the node announced that this was the first step toward building a mesh network that would be able to process Bitcoin transactions without the need for an internet connection.
Despite the ongoing economic crisis in Venezuela, the crypto mining industry has been growing. According to the Cambridge Bitcoin Electricity Consumption Index, Venezuela contributes the most to the Bitcoin hash rate out of any nation in Latin America, which means that there is a substantial amount of computing power being generated in the country.
However, Venezuela introduced a new piece of legislation in September 2020 targeted at the country’s mining industry. In addition to the creation of an obligatory registry and the establishment of new taxes for those who work in mining-related sectors, the new law introduced the controversial “Pool de Minería Digital Nacional” (National Digital Mining Pool). Under this new requirement, it will be obligatory for miners to contribute their hashing power to a new, state-backed mining pool.
Overall, there is still no real clarity regarding the mining pool, which means that the way in which the law will be enforced is not really known, and it has not yet been revealed exactly how Venezuelan miners will have to participate.
Although it may seem paradoxical to see such a level of support for cryptocurrencies from a government that is often seen as being quite restrictive of its citizens and their freedoms, the past year has seen several crypto experiments, including plans to allow Venezuelans to pay for passports with Bitcoin using payments processor BTCPayServer.
However, even though the administration of President Nicolás Maduro did not end up implementing the passport plan, its vision for the use of crypto did not diminish. For example, Maduro proposed an anti-sanctions bill in September 2020, seeking to use cryptocurrencies to evade the various sanctions imposed on the country and hoping to boost crypto use in various business operations.
More specifically, there were reports that Maduro’s administration was using Bitcoin to facilitate trade between Iran and Turkey, two of the current main geopolitical allies of the state.
It was also reported in November 2020 that the Venezuelan Army decided to open the Centro de Producción de Activos Digitales del Ejército Bolivariano de Venezuela (Digital Assets Production Center of the Venezuelan Army), a center that houses ASIC mining equipment designed for proof-of-work cryptocurrencies in order to generate “unblockable” financial income, according to the military leaders who inaugurated the facility.
All this progress made on the part of the Venezuelan state in the crypto ecosystem has been to seek solutions to get around the sanctions that the United States has imposed on Maduro, his cabinet and high-ranking military officials.
However, U.S. authorities have declared that they are monitoring Venezuela’s cryptocurrency operations, and in June 2020, they even added its cryptocurrency superintendent — the highest authority on the regulation of the crypto ecosystem in Venezuela — to the U.S. Immigration and Customs Enforcement’s Most Wanted List.
Record Number Of Bolivars Locked Up In Bitcoin
The bullish surge of Bitcoin’s price has been coupled with the rapid devaluation of Venezuela’s fiat currency, which has resulted in a record number of bolivars being traded in for Bitcoin. In the first week of December 2020 alone, peer-to-peer exchange LocalBitcoins saw 5.85 billion bolivars exchanged on the platform. By the first week of February, this number had jumped to 8.56 billion bolivars.
The complicated political and economic situation in Venezuela has led the government to consider alternative solutions. In the midst of this scenario, blockchain technology and cryptocurrencies, in particular, have been brought to the fore.
Maduro is not the only one who sees cryptocurrency as a way out of troubled waters. One of his main opponents, Juan Guaidó — who is president of the National Assembly and recognized as Venezuela’s legitimate president by some 60 countries — has used the stablecoin USD Coin (USDC) to evade financial restrictions imposed by the Maduro administration in order to send humanitarian aid to Venezuelans.
The funds used by Guaidó came from assets that were seized by U.S. authorities from the U.S.-based bank accounts of Venezuelan state companies and various members of Maduro’s administration.
Opinions Within The Ecosystem
To understand better what it felt like on the ground within the crypto ecosystem in Venezuela, Cointelegraph en Español spoke with some of the main actors who were involved in the various events that set the tone during the past year.
Jorge Farias, CEO of Cryptobuyer, opined to Cointelegraph en Español that the use and adoption of crypto as a form of payment in Venezuela is becoming a reality: “The global and local situation has made it so that thanks to the pandemic, businesses and individuals are looking for payment alternatives that do not require the interaction or physical presence of people.”
Ernesto Contreras, head of business development at Dash Core Group, mentioned that Dash’s plans to expand to national chains was halted due to the spread of the pandemic. Additionally, during the lockdown period, “We saw how delivery offers grew, which work in a 100% digital environment, and several services like Dingo, Piido and others have joined in accepting Dash and cryptos.” He added further:
“Despite the immense difficulties that the Coronavirus has brought, the crypto ecosystem continued to reach great milestones in Venezuela during 2020, and this added to a global environment that is increasingly digital, and with a positive trend for cryptocurrencies in the world, has opened more doors of great importance for the growth, adoption and use of Dash and cryptos.”
Javier Bastardo, host of the Satoshi en Venezuela podcast, told Cointelegraph en Español that “Venezuela continues to be one of the most active p2p exchange markets.” However, he believes that the trend has not reached its peak just yet.
Moreover, he believes that FOMO — the fear of missing out — is not influencing the situation as much as in 2017 and that a steady inflow of people who heard about cryptocurrencies in the past are only now opting to enter the market. He also added that another factor that has dominated the past year has been the willingness to start paying directly in crypto, which ultimately delivers a sustained level of adoption.
Anibal Garrido, CEO AnibalCripto, told Cointelegraph en Español that “Venezuela has been part of important contributions to the development of the ecosystem.” He further added that:
“The difficult situation of COVID-19 has left us with a great learning experience: NOT to depend on physical presence for the harmonious development of our society.”
He added that the local mining law sets a precedent for other countries to evaluate and consider. He also mentioned the incorporation of crypto payments in retail chains along with the developments in providing fast, secure fiat-to-crypto exchange processes.
Mariangel Garcia, community manager for Binance Spanish, believes that “Venezuelans were shaken out of our comfort zone, businesses were forced to start a digital transformation and now many users can see how options abound that before this situation did not exist.”
She further told Cointelegraph en Español that this translated into the widespread adoption of Binance’s native cryptocurrencies in the country, as well as a surge in demand for its peer-to-peer platform. For Garcia, this means that “Thousands of Venezuelans have found financial freedom in our products without limitations.”
She concluded by saying that: “Venezuela is the only country in Latin America with an inclusive vision towards the adoption of cryptos, which is a good start.”
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