Venezuelan cryptocurrency Petro, backed by its huge oil reserves will be open for pre-sale on February 20th, as announced by President Nicolas Maduro on Tuesday. The leftist leader hopes to capitalize on the oil reserves of the country as well as the craze for cryptos to redeem the country from its financial vows. The state-sponsored currency comes at a time when Bolivar is plunging to an all-time low and hyperinflation is gripping the country’s entire socio-economic system.
Maduro finds salvation in Petro
In a meeting with the council of ministers, Maduro signed the official whitepaper for the currency and unveiled a miner for the currency, called Petro Container. The crypto will go on a pre-sale on February 20th, but will not be available in Bolivar initially, as the official currency is struggling with hyperinflation.
Late last year, he announced that Venezuela would be floating its own digital currency in 2018. However, the opposition parties suggest that such a move is illegal. The currency is backed by the crude reserves of the country, which are the largest in the world. Considering the hardships that the economy is facing, this could be a masterstroke by Maduro, if it runs successfully and brings sufficient investor interest and money back home.
Critics of the move suggest that the government is essentially floating debt in the market to overcome its problems. Using cryptos as a debt instrument will save Venezuela from US sanctions on the traditional financial instruments, giving it access to easy money. However, the US Treasury was quick to comment on the skepticism suggesting that American citizens buying Petro will be violating the US sanctions regardless of its purpose.
Government is confident
In a televised interview, the cryptocurrency superintended of Venezuela Carlos Vargas said that they would not be accepting bolivars for Petro purchase. The initial offer and presale will be offered only in other cryptos and hard currencies only. He said, “Our responsibility is to put (the petrol) in the best hands and then a secondary market will appear.” Once the secondary market for the currency is created, it could be sold for bolivars.
The government also revealed that 100 million Petro tokens would be issued in total, valued at more than $6 billion. According to a Reuters report, about 38.4 million Petro tokens which are valued at over $2.3 billion will be available at a 60 percent discount on February 15th. A month later, 44 million new Petro tokens will be on sale with a total valuation of $2.7 billion. However, the government denied these reports.
The government has taken a very lenient stance on cryptocurrencies. There have been several detentions in the country for cryptocurrency mining in the recent years. However, Vargas said that those who are mining other currencies like bitcoin or ethereum are not doing anything illegal. He also mentioned that the government is working with the Supreme Court so that people who have been arrested on charges of illegal activity could be protected. Cases against these individuals could be dismissed soon.