The central bank of Venezuela is reportedly exploring the possibility of including Bitcoin (BTC) and Ether (ETH) tokens currently held by the state-owned oil company Petroleos de Venezuela SA (PDVSA) in the country’s international reserves.
This was reported in a Bloomberg article on Sept. 26 who cited four anonymous sources with apparent direct insight into the matter.
Venezuela could use bitcoin, ether for international payments
As per the article, PDVSA has requested that the cryptocurrencies be transferred to the central bank who in turn can use the tokens to pay the company’s suppliers. Central bank officials are also running internal tests to determine whether the crypto tokens could be used to shore up its precariously low international reserves of $7.9 billion – a 30-year low.
US sanctions on Nicolas Maduro’s regime has made it hard for Venezuelan companies like PDVSA to access the international payments systems. It is possible that due to restrictions in receiving payments via conventional channels, PDVSA opted to get paid by its customers in cryptocurrencies instead.
However, converting the crypto into fiat could be difficult for the company due to the KYC and due diligence requirements at most global exchanges. Presumably, the central bank will find it easier to dispose of the crypto and hence the request from PDVSA.
Venezuela has been proactive in using cryptocurrencies
Motivated by the need to bypass the US sanctions, Venezuela has been one of the few sovereign governments to proactively adopt crypto. Last year it announced the launch of the Petro, the world’s first sovereign-issued crypto, which was apparently backed by the country’s oil and mineral reserves. The project has largely been a failure in spite of Maduro’s best efforts but this latest incident shows that cryptocurrency remains one of the potential avenues being used by Venezuela to skirt the sanctions.