Venezuela To Only Accept Controversial Cryptocurrency Petro For Passports

News | October 8, 2018 By:

The government of Venezuela has announced that passport issuance fees would be paid in the country’s oil-backed cryptocurrency, the Petro, starting next month.

In a televised press conference from Caracas last week, Vice-President Delcy Rodriguez said that starting this week, new passports will cost 7,200 bolívars ($115 USD), roughly four times the monthly minimum wage. Rodriguez added that the government would then start charging for passports in the oil-backed cryptocurrency on November 1.

“The price of a new passport will be 2 Petros and [the price] of an extension will be 1 Petro,” said Rodriguez.

The government also created a new police unit tasked to deal with migration issues. According to the United Nations, around 2.6 million Venezuelans have fled the OPEC nation of 30 million, mostly to other parts of South America, due to constant food shortages, lack of running water and power outages. Many Venezuelans have been leaving the country through illegal border crossings mainly on the 2,200-kilometer long border with neighboring Colombia, where almost one million Venezuelan immigrants live.

“The migration police is born to tend to the 72 [ports of entry] that exist at borders, ports and airports,” Rodriguez said.

In July of this year, the International Monetary Fund (IMF) warned that inflation in the embattled South American country could reach one million percent by December. Many blame Venezuela’s woes on  President Nicolas Maduro, who in turn alleges that the country is on the receiving end of an “economic war” waged by the US and Europe.

One of Maduro’s plans to alleviate inflation is to use the Petro cryptocurrency as an official unit of account. Maduro claims that the Petro will strengthen his recently announced economic overhaul plan and will “revolutionize” the global crypto economy with a new form of trade, finance, and monetary exchange.

Financial experts, however, believe that the Petro does not meet the basic standards employed by the more than 2,000 cryptocurrencies around the world. They are also skeptical that the cryptocurrency is really backed by the country’s oil assets.

“I don’t think it is going to work. I think it is going to be a complete disaster,” said Robert Viglione, co-founder of blockchain firm Horizen. “The main proposition, I think, is bogus. They are claiming this cryptocurrency is backed up by natural resources, which in the end there is no way people can claim.”

Fran Strajnar, CEO and Co-founder of Brave New Coin, a data and research company focused on the blockchain and cryptographic Assets industry, was more optimistic. “It’s not a bad idea to kick-start adoption,” Starjnar said.”In fact, it’s a nice contrast to other countries, where you cannot use crypto to pay for government services and taxes. However, we are yet to see adoptionof this currency and we wonder how difficult it might be, for everyday citizens to procure the currency in the first place.”

Jake Choi, CMO at Fantom, a smart contract platform, said despite the controversies associated with the Petro, “We welcome the introduction of a regulated and state-backed cryptocurrency. For the mainstream adoption of cryptocurrencies to happen, we must work with regulators and institutions. In the midst of the cool-down, it’s fantastic to see cryptocurrencies being adopted in real-life and solving real-world problems.”

In March, US President Donald Trump signed an executive order banning any US transactions in the Petro as part of a series of new sanctions against Venezuela. Last month, a bipartisan group of US senators introduced a bill that would extend Trump’s executive order to prohibit US residents from providing software to the Venezuelan government in its efforts to launch the Petro.