Venezuela’s government-issued cryptocurrency, the Petro (PTR), is scheduled to cease functioning on January 15. Introduced in 2018 as a strategy to circumvent U.S. sanctions, the Petro struggled to achieve widespread acceptance. The closure announcement, initially reported on a government-affiliated website for the cryptocurrency, currently remains inaccessible.
The Patria website, previously the exclusive platform for Petro transactions, now requires a password for its administrative section. The Petro’s inception as an oil-backed digital currency followed significant devaluation of Venezuela’s fiat currency, the bolivar, amid U.S. sanctions. This development occurred as Bitcoin was gaining a substantial foothold in Venezuela.
Petro’s Lackluster Performance in Venezuela and Beyond
President Nicolas Maduro of Venezuela mandated the Petro’s issuance, facing resistance from the nation’s parliament. Despite becoming fully functional in 2020, Petro failed to captivate international interest.
Efforts by the Maduro administration to promote Petro among the ten nations of the Bolivarian Alliance for the Peoples of Our America yielded minimal success in terms of adoption.
Notably, Petro never attained the status of legal tender within Venezuela, implying its acceptance was never obligatory. Even Banco de Venezuela, the country’s largest bank, refrained from accepting Petro without a specific presidential directive.
June 2020 witnessed an intensification of scrutiny when U.S. Immigration and Customs Enforcement announced a $5 million bounty for Joselit Ramirez Camacho, the head of the National Superintendency of Crypto Assets overseeing Petro, on allegations of involvement in international drug trafficking.
Ramirez Camacho was eventually arrested in March 2023 in Venezuela on charges linked to financial misconduct in the national oil industry. Following his arrest, the agency he led was shut down for reorganization, extending its closure until March 2024.
This led to the subsequent closure of various cryptocurrency exchanges and mining operations in Venezuela.
It is crucial to clarify that Petro was not a central bank digital currency (CBDC), although the Central Bank of Venezuela had announced plans to create one in 2021. These plans, however, did not come to fruition, marking the Petro as an unsuccessful venture in Venezuela’s attempt to navigate its economic challenges.
In March of the previous year, state regulators halted cryptocurrency mining following an investigation into a corruption scheme involving crypto wallets that misdirected payments due to the state-run oil company Petróleos de Venezuela.
Petro’s Closure: A Reflection of Venezuela’s Crypto Challenges
The discontinuation of the Petro highlights the complex challenges Venezuela has faced in its attempts to integrate cryptocurrencies into its economy. The Petro’s journey from its launch as a potential solution to economic sanctions to its eventual shutdown reflects the intricate interplay between political ambitions, economic realities, and regulatory hurdles in the realm of digital currencies.
The impending shutdown of the Petro marks the end of a significant chapter in Venezuela’s exploration of cryptocurrencies as a means to mitigate economic sanctions and currency devaluation. This move illustrates the difficulties nations can face when attempting to establish new digital currencies, especially in politically and economically volatile environments.