Donald Trump

Trump bans US use of Venezuelan cryptocurrency in new sanction actions

The Trump administration also imposed fresh economic sanctions on Venezuela, but did not impose a long-threatened ban on the country’s oil exports

PUBLISHED : Tuesday, 20 March, 2018, 2:32am
UPDATED : Tuesday, 20 March, 2018, 7:50am

The Trump administration on Monday banned all use by Americans of Venezuelan cryptocurrency, saying that its introduction is intended to skirt US sanctions.

In an executive order issued on Monday that took effect immediately, US President Donald Trump declared illegal all transactions related to Venezuelan digital currencies, coins or tokens. The prohibition applies to all people and companies subject to US jurisdiction. 

The move follows the introduction last month of a Venezuelan cryptocurrency known as the “Petro,” for which the government says it has received investment commitments of US$5 billion.

In the executive order, Trump said it was an “attempt to circumvent US sanctions” imposed for democratic backsliding.

The Trump administration also imposed fresh economic sanctions on Venezuela, but did not impose a long-threatened ban on the country’s oil exports.

The Treasury Department sanctioned four senior current or former Venezuelan officials, including the acting head of the National Treasury Office. US individuals and companies are barred from doing business with them, and any assets they have in the US would be frozen.

The Treasury had said in January that the Petro appeared to be an extension of credit to Venezuela and warned that transactions in it may violate US sanctions.

Venezuela says it raised US$735m at launch of ‘Petro’ 

In February, cash-strapped Venezuela became the first country to launch its own version of bitcoin, the petro, in a move that President Nicolas Maduro celebrated as putting his country on the world’s technological forefront.

The petro is backed by Venezuela’s crude oil reserves, the largest in the world.

But it has arrived on the market as the socialist country sinks deeper into an economic crisis marked by soaring inflation and food shortages that put residents in lines for hours to buy common products.

Maduro had announced late last year that he was creating the digital currency to outmanoeuvre US sanctions preventing Venezuela from issuing new debt.

Bitcoin and other digital tokens are already widely used in Venezuela as a hedge against hyperinflation.

They are also easy-to-use mechanism for paying for everything from doctor visits to honeymoons in a country where obtaining hard currency requires transactions in the illegal black market.

The government has promised that Venezuelans will be able to use the US$60 coins to pay taxes and for public services. 

But with the Venezuelan minimum wage hovering around US$3 a month, it’s unlikely citizens will buy in large amounts.