Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), is using Tether’s USDT — the industry’s largest dollar-backed stablecoin — to skirt new US sanctions, which are aimed at crippling the government of embattled President Nicolás Maduro.
USDT: Venezuela’s Solution For Sweeping Oil Sanctions
According to a Monday Reuters report, PDVSA aims to integrate more usage of the USDT stablecoin as a safeguard against having overseas bank accounts frozen due to US sanctions targeting the nation’s oil and gas industry.
Petróleos de Venezuela S.A. has been slowly moving its oil trades to USDT since last year. By the end of Q1 2024, the state oil company had already moved most of its spot transactions to contracts requiring prepayment in USDT. PDVSA also plans to ask new customers to make payments via a digital wallet.
This strategic crypto adoption comes in the wake of the Biden administration’s decision to reintroduce sanctions on Venezuela last week. The sanctions were reimposed after President Nicolás Maduro failed to fulfill his end of the deal signed in Barbados in October 2023, which was planned to set Venezuela on track to hold a competitive presidential election in 2024.
As cryptocurrency transactions in oil sales are not in adherence with any trade compliance unit, PDVSA and its trading partners are forced to use intermediaries in order to hide the blockchain trail, a trader told Reuters.
Venezuela jumped on the crypto craze in 2018 with the launch of its state-run, oil-backed crypto, the Petro, as a way to help the country bypass United States sanctions, but it was never accepted domestically or internationally, despite measures by the Maduro government to promote it to the 10 member states of the Bolivarian Alliance for the Peoples of Our America. Venezuela ultimately shut down the controversial Petro project in January this year.
That being said, cryptocurrency adoption in Venezuela has long been buoyed by the sheer rate of Venezuela’s economic instability and hyperinflation, which surpasses other crisis countries. Crypto assets such as Bitcoin (BTC) offer a haven for citizens looking to preserve their wealth amid Venezuela’s economic woes. Many Venezuelans turn to cryptocurrencies as an alternative to the devaluing national currency, the Bolívar.
