Venezuela to Prohibit Trading of Its Oil-Backed Digital Currency "Petro"

Venezuela made public its plans to gradually discontinue its state-supported digital currency, Petro (PTR), on Monday, January 15. This decision comes only five years after its initial introduction in February 2018.

Highlights

• Venezuela's President Nicolas Maduro introduced the Petro (PTR) in February 2018.
• The Petro (PTR) was supported by Venezuela's Oil Reserves and was designed to bolster the nation's fiat currency, the bolívar.
• In recent years, the bolívar has experienced swift devaluation due to an economic crisis worsened by U.S. sanctions.  

Venezuela revealed on Monday, January 15, its intention to gradually discontinue its state-backed cryptocurrency, Petro (PTR), a mere five years following its initial launch in February 2018. This announcement was communicated through a notice posted on the exclusive Patria Platform, the sole website for trading Petro (PRT).  

Nicolas Maduro Introduced Petro (PTR) Cryptocurrency in February 2018: A Recap

Venezuela's President, Nicolas Maduro, launched the Petro (PTR) in a pre-sale during February 2018, aiming to provide support to the country's local fiat currency, the bolívar, amid a deepening economic crisis worsened by U.S. sanctions.

The PTR token was backed by Venezuela's abundant oil reserves, but encountered controversy even prior to its launch. Initially, the opposition-controlled congress in the country deemed it illegal to borrow against the oil reserves. Subsequently, in 2019, U.S. authorities sanctioned a Russian bank for financing the Petro cryptocurrency.

Concurrently, the Venezuelan government, under Maduro's leadership, made various efforts to integrate the Petro with essential social services. For instance, it became a requirement for obtaining passports to contribute to a social housing initiative, and the minimum wage was linked to it by 50%.

The Petro faced its downfall due to a corruption scandal related to financial irregularities in using crypto assets for oil operations, resulting in the resignation of the petroleum minister, Tareck El Aissami. This was further compounded by a crackdown on bitcoin mining operations within the country.

Reportedly, all remaining Petro tokens are set to be converted to bolívars, according to local sources.