Venezuela has moved one step closer to rolling out their own state-sponsored cryptocurrency after President Nicolas Maduro announced on Tuesday, January 30th, that the country will hold a token pre-sale on February 20th.
The announcement came after President Maduro signed a white paper for the national cryptocurrency, aptly named the ‘Petro,’ and announced plans to move forward with the pre-sale. Unlike many other cryptocurrencies in circulation now, Venezuela have announced that the Petro will be backed up with real commodities, including Venezuela’s extensive oil reserves.
The Petro was first announced in December 2017 with the express aim of acting as a vehicle to bypass Western financial sanctions, which have affected Venezuela’s ability to raise foreign investment. Maduro claimed that the proposed Petro cryptocurrency will greatly increase Venezuela’s ability to “access foreign currencies” and to “obtain goods and services” from around the world.
Apart from having a role in attracting foreign capital, the Petro will also be used by ordinary citizens of the South American country in connection with the Venezuelan national ID card, presumably with cryptocurrency wallets tied to a national registry. Mining centers are being set up at educational centers and other locations to assist with the launch.
However, the Petro has also met a fair share of resistance, both at home and abroad. Venezuelan opposition members have criticized the proposed cryptocurrency, claiming that it simply provides a way to borrow against oil reserves, an act which requires legislative approval. Others have written off the Petro as a tool for government corruption and money laundering.
Officials from the United States, from where many of the financial sanctions originate, denounced Venezuela’s plans to walk around US sanctions with the proposed cryptocurrency. Senators Marco Rubio and Robert Menendez urged the US Treasury Department to “combat the use of cryptocurrency evade US sanctions” in an open letter.