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Abu Dhabi, UAESunday 23 September 2018

Venezuela gets $735m in first 'petro' cryptocurrency order 

President hoping the petro digital currency will allow the ailing Opec member to skirt US sanctions as the bolivar currency plunges to record lows

Venezuela's President Nicolas Maduro is hoping to bypass sanctions with digital offering. Ariana Cubillos.AP
Venezuela's President Nicolas Maduro is hoping to bypass sanctions with digital offering. Ariana Cubillos.AP

President Nicolas Maduro said on Tuesday that Venezuela had received $735 million in the first day of a pre-sale of the country’s “petro” cryptocurrency, aimed at pulling the country out of an economic tailspin.

Mr Maduro is hoping the petro will allow the ailing Opec member to skirt US sanctions as the bolivar currency plunges to record lows and it struggles with hyperinflation and a collapsing socialist economy.

Blockchain experts have warned the petro is unlikely to attract significant investment. Opposition leaders have said the sale constitutes an illegal debt issuance that circumvents Venezuela’s majority-opposition legislature, and the US Treasury Department has warned it may violate sanctions levied last year.

Mr Maduro did not give details about the initial investors and there was no evidence presented for his figure. He added that tourism, some petrol sales and some oil transactions could be made in petro.

“Today, a cryptocurrency is being born that can take on Superman,” said Mr Maduro, using the comic character to refer to the United States, as he was flanked by mining rigs in a state television address.

The official website for the petro on Tuesday published a guide to setting up a virtual wallet to hold the cryptocurrency. The cryptocurrency goes public next month.

Venezuelan Cryptocurrency Superintendent Carlos Vargas last week said the government was expecting to draw investment from investors countries including the US and Europe.

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The value of the entire petro issuance of 100 million tokens would be just over $6 billion, according to details given by Mr Maduro in recent months, though no new price information was provided.

The tokens will each be valued at and backed by a barrel of Venezuelan crude oil, Mr Maduro has said.

Advisers working for the government have in the past recommended that 38.4 per cent of the petros should be sold in a private auction at a discount of 60 per cent.

Mr Maduro says his government is the victim of an “economic war” led by opposition politicians with the help of the government of US President Donald Trump.

Sanctions levied last year by Washington block US banks and investors from acquiring newly issued Venezuelan debt, effectively preventing the nation from borrowing abroad to bring in new hard currency or refinance existing debt.

The petro will not be a token on the Ethereum network, as was previously disclosed in a whitepaper provided by the government.

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