The US Treasury Department has red-flagged Venezuela’s “Petro” cryptocurrency, warning investors in the United States that engaging with the currency might prove a legal liability because of sanctions in place against the Latin American nation.
“Available information indicates that, once issued, the Petro digital currency would appear to be an extension of credit to the Venezuelan government,” a Treasury spokesman told Reuters on Tuesday.
Any such transactions could be a violation of sanctions that prohibit new debt from the Venezuelan state or its state oil company PDVSA, he said, noting: “The Venezuelan Petro currency could therefore expose US persons to legal risk.”
Venezuelan officials have yet to respond to the warnings.
Nicolas Maduro and other senior Venezuelan officials introduced the Petro as a strategy to shore-up independence in the face of US-imposed financial penalties which have taken a toll on the nation’s economy.
The move comes as other cryptocurrencies, notably Bitcoin, experience an unprecedented rise in value, catching the attention of international investors more accustomed to dealing with traditional financial markets.
Cryptocurrencies typically are not backed by any government or central banks, nor are they regulated. However, the US Security and Exchanges Commission has been increasingly tracking digital currencies, classing some tokens as securities to make them subject to oversight.
The Petro is unique among cryptocurrencies in that it is backed by Venezuela’s vast reserves of natural resources, most notably oil.