Philadelphia, January 10, 2018 (venezuelanalysis.com) – Venezuela’s opposition-controlled National Assembly (AN) issued a resolution Tuesday rejecting a decree by President Nicolas Maduro creating a national cryptocurrency, known as the Petro.
On December 3, Maduro unveiled the Petro – which he said will be backed by the country’s immense oil, gas, and mineral reserves – as a means of bypassing financial sanctions imposed by the Donald Trump administration last August.
According to Maduro, each Petro will be worth one barrel of Venezuelan oil and, like all other cryptocurrencies, will be traded electronically independently of any central bank.
However, the opposition has slammed the move as “unconstitutional” on the grounds that all new issuance of debt must be approved by the AN.
“They have announced the issuance of a supposed cryptocurrency that is not one, but rather constitutes an illegal and unconstitutional action,” stated First Justice party legislator Jorge Millan during the parliamentary debate.
Elected in December 2015, the opposition-held legislature has nonetheless been in contempt of court since it swore-in three lawmakers accused of voter fraud in July 2016, rendering all actions by the body “null and void” in the eyes of the Supreme Court.
The normalization of the situation of the AN has been one of the opposition’s principal demands in ongoing internationally-mediated talks being held with the Maduro administration in Santo Domingo.
For their part, government spokespeople have demanded the opposition leadership leverage its close Washington connections to persuade the Trump administration to lift economic sanctions that have crippled the country’s economy through a ban on US banks and financial institutions entering new dealings in Venezuelan debt.
In the meantime, Maduro has presented the new cryptocurrency as a strategy for circumventing what he has called a “financial blockade”, which he says is responsible for “kidnapping” billions of dollars of Venezuelan funds earmarked for food and medical imports.
Last week, the president ordered the issuing of 100 million Petros, which will be backed by the oil contained in camp number one of the Ayacucho Block of the Orinoco Oil Belt, which is home to the largest known reserves of oil on the planet.
Each Petro will reportedly be exchangeable for the value of Venezuelan oil in dollars – currently at $59 dollars per barrel – or the equivalent in other cryptocurrencies.
According to the government, over fifty-two thousand Venezuelans have already registered to mine the new digital currency, which involves using computers to solve complex, energy-intensive mathematical equations in order to generate each new Petro.
It remains to be seen whether investors will take to the new cryptocurrency, as Venezuela is currently in the midst of severe economic downturn that has seen crude oil production plummet to a 28-year low of 1.7 million barrels per day.
Venezuela is the first country to issue a national cryptocurrency, though other states are preparing to follow suit, including Russia, Estonia, and China.