“Petro” Cryptocurrency Declared Illegal By Venezuela’s Congress

News | January 11, 2018 By:

Venezuela’s opposition-run congress, the Asemblea Nacional, has outlawed president Nicolas Maduro’s oil-backed cryptocurrency, called the “Petro.”

The cryptocurrency was first announced at the beginning of December to help combat the US’ “blockade” against  Venezuela. At the time, Maduro said it will enable the country to advance in monetary sovereignty and carry out its transactions to overcome the financial blockade. Maduro also signed a decree for the creation of the Superintendence of El Petro Cryptocurrency to govern the direction of the cryptocurrency from Venezuela and the world.

Two weeks ago, Maduro announced that every single Petro will be backed by a barrel of oil. A total of 5.3 billion barrels of oil reserves (worth $267 billion) at the Ayacucho block 1 in Venezuela’s Orinoco Belt will back the cryptocurrency. The government also created a special team of cryptocurrency specialists so they will be engaged in mining in all states and municipalities of the country.

On Tuesday, however, the Venezuelan parliament claimed that any issue of the cryptocurrency would violate constitutional requirements that mandates the legislature approve any borrowing against Venezuela’s oil wealth. The parliament called the petro an effort to illegally mortgage the country’s oil reserves.

“This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” said Venezuelan legislator Jorge Millan. “It is tailor-made for corruption. This is a new fraud disguised as solutions to the crisis. Here, the only novelty is that this inefficient government wants to compensate for the lack of production with these virtual barrels, generating new and illegal debt.”

The legislators also cautioned investors that the cryptocurrency would be seen as null and void once Maduro, who is seeking another term in this year’s election, steps down from his post. Venezuela has suffered from hyperinflation that has rendered its national currency virtually worthless, resulting in severe shortages of goods in its cities. That has, at times, created civil unrest.