“Petro” Cryptocurrency Opposed By US Senators

Investing, News, Regulation | January 24, 2018 By:

Two US senators have denounced Venezuela’s planned cryptocurrency in a letter addressed to the US Treasury Secretary Steven Mnuchin.

In an open letter, US Senators Marco Rubio and Robert Menendez demanded to know what the US government was doing to foil attempts by rogue nations in leveraging cryptocurrencies to skirt imposed sanctions. In particular, the two senators are targeting the failed state of Venezuela.

Last month, Venezuelan president Nicolas Maduro announced that the country is creating a cryptocurrency that will be backed by Venezuelan reserves of gold, oil, gas, and diamonds. According to Maduro, the cryptocurrency, called the “Petro,” will help combat the US’ “blockade” against the country. It will enable Venezuela to advance in monetary sovereignty and carry out its financial transactions to overcome the financial blockade.

The two senators are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bond-holders in the US, actions that would clearly thwart the intent of US imposed sanctions. The senators are also concerned that North Korea and Russia will be watching with interest, looking for an opportunity to copy Maduro’s plans.

“We have serious doubts about whether Venezuela has the capacity to launch a cryptocurrency, but regardless, it is imperative that the US Treasury Department is equipped with tools and enforcement mechanisms to combat the use of cryptocurrency to evade US sanctions in general, and in this case in particular,” the two senators stated.

Earlier this month, Venezuela’s opposition-run congress, the Asemblea Nacional, declared the proposed cryptocurrency illegal. 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.