Venezuelan Oil to Back Sanctioned Cryptocurrency

Venezuelan President Nicolas Maduro on Wednesday said some 30 million barrels of oil sitting in storage tanks would serve as backing for the OPEC nation’s state-run cryptocurrency, the petro, which has been sanctioned by the United States, Reuters informs.

The latest move is a renewed push by Maduro’s socialist government to promote use of the petro in recent weeks, as inflation continues to erode Venezuelans’ meager salaries and Washington’s sweeping sanctions complicate Caracas’ ability to engage in overseas financial transactions.

“I will deliver these 30 million of barrels as a liquid, physical, material backing for the petro,” Maduro said. “The inventories of crude and products in storage tanks are available for immediate commercialization … to sustain and back the operations of the sovereign Venezuelan crypto-asset, the petro.”

When the petro launched early last year, authorities had said it would be backed by 5 billion barrels in untapped crude reserves from an area without infrastructure to get it out of the ground, a Reuters special report here found. The coin also does not trade on any major cryptocurrency exchange.

The apparent shift comes as Venezuela’s crude inventories have risen in recent months, as U.S. sanctions on state oil company PDVSA – part of the Trump administration’s efforts to oust Maduro – scare away potential buyers. That has caused PDVSA to reduce crude extraction at times this year.

In recent weeks, officials have increasingly promoted use of the petro, stating that dozens of retailers now accept it. Maduro, who blames sanctions for Venezuela’s economic problems, did not provide details of how the sale of oil inventories to back the petro would work.

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