Venezuela‘s state-run oil company, PDVSA, is turning to cryptocurrency, particularly Tether (USDT), to bypass US sanctions and facilitate international transactions.
Faced with traditional financial avenues blocked by US sanctions, Venezuela has shifted towards using Tether for its oil sales and other international dealings.
This move aims to counteract disruptions caused by sanctions and reflects a growing global trend of using cryptocurrency in international trade, although it’s still in its early stages.
The US has recently tightened sanctions on Venezuela to limit financial transactions and freeze foreign accounts holding oil sale proceeds. This aligns with Washington’s strategy to pressure Venezuela towards political reforms.
The US Treasury has also declined to renew PDVSA’s general license, setting a deadline for the company to halt operations by the end of May. Despite these challenges, Venezuela’s oil exports have risen under Oil Minister Pedro Tellechea, reaching about 900,000 barrels per day in March, the highest in four years.
PDVSA has adapted its transactions by requiring prepayment in USDT for half of each cargo’s value, transitioning from spot deals to contract models. However, using USDT for large transactions like oil sales is still uncommon and met with trader skepticism.
One oil trader commented that such USDT transactions often don’t meet compliance requirements, necessitating the involvement of intermediaries. This reliance on intermediaries can reduce PDVSA’s share of the oil proceeds.
Nevertheless, PDVSA now requires all new customers involved in oil transactions to hold cryptocurrency in a digital wallet, even in existing contracts that didn’t specify USDT use.
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