El Petro (cryptocurrency)

El Petro (petro) is Venezuela's own cryptocurrency, provided with reserves of natural resources (oil, gas, gold and diamonds).

2020

Venezuelans can now pay taxes with digital currency

In mid-August 2020, it became known that Venezuelan residents will be able to pay taxes with the national cryptocurrency Petro (PTR). The Bolivarian Council of Mayors signed the so-called "Agreement on the Harmonization of National Taxation."

The Venezuelan government said in a statement that the country's vice president, Delcy Rodríguez, will be responsible for implementing the taxpayer register using a digital consultation tool. He also leads the campaign to create an information exchange and monitoring system for companies that will register payments with Petro.

Thanks to this simplification of procedures, the administrative activities of the state will become more effective and will stimulate economic activity in the industrial and commercial fields, "Rodriguez said.

Venezuelan residents can now pay taxes at El Petro

According to the official statement, representatives of 305 out of 335 municipalities, all under the mandate of the United Socialist Party of Venezuela (PSUV), spoke in favor of the new tax collection mechanism. The rest still want to collect taxes in fiat currency (bolivars).

Consequently, the agreement applies to 305 municipalities of the country and determines that tax and sanction payments can be levied in an oil-backed cryptocurrency. However, mayors who do not belong to PSUV recall the lack of technological infrastructure for processing payments in cryptocurrency.

The government is actively supporting a plan to promote the widespread use of cryptocurrency, and since the launch of Petro has been finding more and more use options. So, on June 11, 2020, the Venezuelan government announced that almost 15% of all fuel payments at gas stations throughout the country are made using Petro.^[1]

US accused Venezuelan president of drug trafficking with cryptocurrency

At the end of March 2020, the US Department of Justice accused Venezuelan President Nicolas Maduro and 14 current and former Venezuelan officials of "drug terrorism, corruption, drug trafficking and other criminal offenses." According to the United States, they have been cooperating with the left-wing radical group "Revolutionary Armed Forces of Colombia" for 20 years. More details here.

Refusal of Venezuelan sellers to accept national cryptocurrency

In early February 2020, retailers in Venezuela stopped accepting payments in the local cryptocurrency El Petro, as hyperinflation caused a massive devaluation. Meanwhile, the government re-introduced the position of price control inspector to force stores to adopt national digital currency.

It turned out that merchants stopped accepting cryptocurrency due to the extremely low exchange rate in the country's central bank. They call El Petro a scam. Having tried to liquidate their oil assets at the Bank of Venezuela, they received almost nothing. The reason for this significant devaluation is that the central bank is exchanging El Petro for bolivar at the purchase rate. Due to the fact that in 2019 the country's currency, bolivar, lost almost 99% of the value, investments in digital money almost depreciated.

Retailers in Venezuela stopped accepting payments in the local cryptocurrency El Petro, as hyperinflation caused a massive devaluation

The executive director of Consecomercio - National council of trade and services of Venezuela, Josefina Salvatierra noted that the dealers accepting El Petro payments very much risk, considering a mass hyperinflation in the country. Former Consecomercio President Maria Carolina Uzcátegui called cryptocurrency a fraud.

One way to implement El Petro is to sell it on the LocalBitcoins service. However, even here the El Petro cryptocurrency rate diverges from the face value of $60, it can be exchanged only for half a price.

In addition, Venezuelan merchants are waiting for a blow from the Maduro administration, which is reintroducing the "price police." The government has instructed a team of inspectors to enforce price controls across the country in the hope of containing hyperinflation. From the very beginning, the Maduro administration tried to promote the national cryptocurrency program, but the current situation can hardly be called successful.^[2]

2019

Venezuela intends to pay Russia with cryptocurrency for housing construction

In early November 2019, it became known about Venezuela's plans to pay Russia cryptocurrency for the construction of housing. Experts believe that such transactions are not yet possible.

As the Venezuelan Minister of Construction Ildemaro Villaroel told RIA Novosti, the government plans to resume cooperation with Russia in the construction of social housing and intends to attract El Petro to finance cryptocurrency.

Experts believe that such transactions are not yet possible.

We are very optimistic that next year the best conditions will be for Venezuela, and Russia and I will be ready to resume housing projects, "the minister said during a visit to Yekaterinburg to participate in the events of World City Day.

Villaroel noted that Venezuela has a large housing shortage, and it is planned to attract foreign developers to solve this problem, primarily from countries friendly to the state, one of which is Russia. The parties agreed that Venezuela will send to the Ministry of Construction of Russia a package of proposals and characteristics of the necessary facilities.

According to the minister, Venezuelan President Nicolas Maduro approved the allocation of 75 billion bolivars (about $750 thousand) and 909 thousand. El Petro to complete the projects started and build new houses.

By the beginning of November 2019, 33 Venezuelan companies are undergoing the process of checking technical, logistical and financial capabilities for the implementation of housing projects with cryptocurrency.

The calculation of cryptocurrency for the construction of facilities by Russian companies in Venezuela is impossible under the law, said RIA Real Estate Ombudsman for Digital Transformation, President of Osnova Group of Companies Alexander Ruchev.

According to him, without the adoption of relevant legislation, these initiatives of the Venezuelan government cannot be implemented, and this news is likely to be followed by no action.^[3]

How Venezuela uses Bitcoin to circumvent US sanctions

At the end of July 2019, the Spanish publication ABC discovered that Venezuelan President Nicolas Maduro and his administration are using cryptocurrency to circumvent US economic sanctions. At the same time, the government uses Bitcoin, and not El Petro's own national digital currency.

According to media reports, the government introduced an automated aviation tax collection system at the international airport using the Jetman Pay application. Then these tax revenues are converted into bitcoins and transferred to exchanges in Hong Kong, Hungary, Russia and Keith. In the end, after the reverse transfer to dollars, the money settles in government accounts.

Venezuelan authorities introduce an air tax collection system through cryptocurrencies

Thus, the Venezuelan government is trying to circumvent the ban on the use of bank accounts in the United States and participation in the open international market. According to media reports, so far the scheme has been involved only at the international airport of Mayketia, located near Caracas, the country's capital.

However, the Maduro administration is negotiating to extend the use of the Jetman Pay application to other airports in the country. In addition to aircraft, it is also planned to withdraw funds from refueling fees for transit aircraft served by the airport.

The contract, which allegedly has not yet been signed, states that the Jetman Pay application will be used to collect fuel duties, and then Petróleos de Venezuela, a state-owned oil and gas company, will use the application to pay state taxes that will go abroad in the form of cryptocurrency.

All these schemes in Venezuela are unfolding against the backdrop of the deepest economic crisis and hyperinflation. The rapid devaluation of the national currency forced the population to turn to cryptocurrency, primarily Bitcoin.^[4]

2018

Pension allowances in Venezuela began to pay at El Petro

In December 2018, it became known that Venezuelan residents began to receive part of the pension in cryptocurrency. The government is actively promoting El Petro to stop hyperinflation, which reached   1,300,000 in a year.

According to Fortune, citing the Venezuelan edition of Caracas Chronicles, initially pension allowances before the New Year in the Carnet de la Patria system (created in parallel with the traditional banking system) were accrued in sovereign bolivars, but then the amounts were quickly withdrawn and made transfers in cryptocurrency.

Venezuelan residents began to receive a pension in cryptocurrency

The government has been distributing bonuses to pensioners through the Carnet de la Patria system for several months, "writes Carlos Hernandez, a Caracas Chronicles journalist. - If you are starving, then it is very difficult to give up the premium, which can be twice your monthly salary, simply by registering on the site patria.org.ve. Making people on the brink of survival dependent on government charges and forcing them to create web pages on the patria.org.ve as the only way to access these bonuses is an ideal method of forcing them to abandon the official banking system.

It is reported that now pensioners need to connect the El Petro wallet to the pension portal, after which they will be able to withdraw their money. Given that the cryptocurrency itself is practically not used, tokens can be exchanged for bolivars.

However, many Venezuelans, judging by reports on Twitter, do not understand what to do with cryptocurrency or they simply cannot convert it into bolivars. Unions called the payment of pensions at El Petro a gross violation of the laws of the country.

The official rate of the sovereign bolivar as of December 20, 2018 is $0.1. True , only the president  and members of the government can buy dollars at this rate: the market rate  is 526 new bolivars for  $1.^[5]

Venezuelan residents were obliged to pay for a passport with cryptocurrency

In October 2018, it became known that Venezuelan residents should pay a fee for obtaining a foreign passport only in the national cryptocurrency. Moreover, it will cost not cheap - two units of El Petro, which corresponds to 7,200 bolivars ($115) or four minimum salaries in the country. The extension of the document will cost one El Petro coin. This was reported by the South China Morning Post, citing Venezuelan Vice President Delcy Rodriguez, who made a statement at a television press conference in Caracas.

Venezuelan residents should pay a fee for obtaining a foreign passport only in national cryptocurrency

The fee for obtaining or renewing a passport has increased several times in the face of denomination and the worst financial crisis in the country. Venezuelans are forced to stand in line for several days to submit documents and receive passports, since the lack of materials and the gigantic level of corruption made state documents difficult for citizens to access. According to the UN, a strong economic and humanitarian crisis leads to the fact that about 5 thousand people leave the country every day.

The requirement to pay state duties for passports in cryptocurrency greatly complicates the trip of Venezuelans abroad, and the country is almost cut off from the rest of Latin America: large airlines have stopped flying to this state.

Many people are forced to leave the country illegally, most often using the poorly guarded 2,200-km border with neighboring Colombia. By the beginning of October 2018, almost 1 million immigrants from Venezuela live in Colombia.

Reuters correspondents talked with Venezuelan residents and reported that the townspeople never used El Petro coins for calculations and doubt whether their acquaintances and relatives did this. Journalists suggested that no cryptocurrency exists at all.^[6]

Use in international trade

On September 20, 2018, Venezuelan President Nicolas Maduro officially announced plans to use El Petro's national cryptocurrency on the international market.

On October 1, 2018, El Petro will enter foreign exchange turnover to become a means for commodity and monetary exchange, as well as for the acquisition and conversion of currency around the world, Maduro said on state television.

According to the Reuters news agency, analysts and economists doubt that Venezuelan cryptocurrency will be widely accepted in international markets. Skeptics wonder how cryptocurrency, which initially does not have a control center and is not subject to control, can generally be state? Experts admit that US President Donald Trump will impose new sanctions on Venezuela prohibiting transactions with El Petro.

On October 1, 2018, El Petro cryptocurrency will be put into circulation for payments in international trade

Nicolas Maduro believes that the introduction of El Petro to the global market is very important when the digital currency has become part of the country's economic recovery program.

In May  2018, the head of state said that Venezuela and Palestine intend to use El Petro in mutual settlements.

To support the local cryptocurrency, Nicolas Maduro ordered the oil company PDVSA, petroquimica de Venezuela (Pequiven) petrochemicals and CVG Corporation, which is engaged in mining, to carry out part of the transactions using El Petro.

Earlier, the Venezuelan authorities decided to carry out monetary reform due to the worst economic crisis and hyperinflation. Because of this, street protests have repeatedly taken place against Maduro demanding his resignation, but in May 2018 he  was re-elected  to the presidency.

In August, Maduro said that the El Petro exchange rate will be fixed and will amount to $60 or 3600 sovereign bolivars who have passed the denomination for one cryptocurrency token.^[7]

Cryptocurrency became the second official currency in Venezuela

In August 2018, it became known about the transformation of El Petro into the second official currency of Venezuela. To this end, President Nicolas Maduro went in the hope of saving the country from hyperinflation.

Starting August 20, two new official currencies will operate in Venezuela: the "sovereign bolivar," which has passed the denomination, and the El Petro cryptocurrency. They will become interchangeable and will cost the same.

Venezuelan President Nicolas Maduro is conducting a major monetary reform

This will be the second settlement unit in the republic, and all operations of the state-owned oil company PDVSA will be carried out in it, "Maduro said in his television address to citizens.

According to the head of state, the central bank of Venezuela will begin to publish official figures for linking the bolivar to El Petro every day. At the same time, the old money will remain valid - until it finally goes out of circulation. The banking system is already equipped with new bills.

To put a new currency into circulation and begin the process of adapting to it, Nicolas Maduro made August 20, 2018 a day off. The banks have already received new bills.

Maduro said that  the country's salary system will also be tied to El Petro. The president did not disclose additional details on this subject.

This is a fundamental change in the country's monetary model, "said Maduro, adding that the new system of wages and prices, tied to cryptocurrency," will mean a significant improvement and stable income of workers, "as well as " fix the maximum sales price. "

The president also promised that fraudsters will not have opportunities for fraud, since prices will be tightly tied to the national cryptocurrency.

According to him, by 2020 Venezuela will restore stability, economic and social prosperity, and the nature of economic development "will not be dependent or parasitic." ^[8]

Venezuela tied the national currency to cryptocurrency

At the end of July 2018, Venezuelan President Nicolas Maduro announced that the national currency (bolivar) would be tied to the El Petro cryptocurrency. Due to this, it is planned to stabilize the financial situation in the country.

According to cryptocurrency experts cited by Reuters, El Petro does not trust everyone due to a lack of trust in the Maduro government and the mismanagement of the country's existing national currency.

In addition to linking to cryptocurrency, the bolivar will be denominated and will lose five zeros. Innovations will enter into force on August 20, 2018.

Initially, it was assumed that  the sovereign bolivar would be introduced on June 4 instead of the current bolivar, impaired  by hyperinflation, but then it was assumed that  three zeros,  not five, would be removed from the bills. However, then the authorities postponed the implementation of this decision.

These measures, which should help "radically stabilize and change the monetary and financial life of the state," Nicolas Maduro conducts under conditions of huge inflation, which from January 2017 to January 2018 exceeded 4,000%, and in February its figure was more than 6,000%. Then  Bloomberg for the fourth time in a row called Venezuela the country with the most "unfortunate" economy in the world.

On July 24, 2018, the IMF warned that inflation in Venezuela could reach  1,000,000% by the end of the year, if the authorities do not change financial policy. This will put the country in the position of Zimbabwe in the 2000s. and Germany in the 1920s.

Earlier, Maduro said that the central bank of Venezuela will be able to buy gold for El Petro. Since April, housing sales for cryptocurrency have started in Venezuela.^[9]

The Venezuelan government said it was the victim of an "economic war" led by opposition leaders with the support of Washington, which in 2017 imposed sanctions on the Maduro administration and a group of officials.

Trump banned El Petro

On March 19, 2018, the president USA Donald Trump signed a decree prohibiting Americans from conducting operations with the Venezuelan cryptocurrency El Petro.

Any transactions by individuals and legal entities of the United States or in the United States in cryptocurrency issued by the Venezuelan government are prohibited from today, the document distributed by the White House says.

Trump instructed Treasury Secretary Steven  Mnuchin to prepare the necessary regulations to enforce the decree. The American leader emphasized that "any conspiracy to violate this ban" will be prosecuted by law.

Trump forbade Americans to carry out operations with Venezuelan cryptocurrency

As explained in the White House, the ban on the use of El Petro by American citizens is due to the intentions of the US government not to allow the regime of Venezuelan President Nicolás  Maduro to circumvent the sanctions imposed on the country.

Diosdado Cabello, vice president of the United Socialist Party of Venezuela, condemned the restrictions that the US authorities have imposed on El Petro cryptocurrency. According to the politician, Trump and the United States are not able to take diplomatic ways to resolve their conflict with Venezuela and instead chose a "warlike" approach.

President (USA) Donald Trump is scared. This is a sign that Venezuela is following  the right path... Sooner  or later we will end the economic  blockade, "Nicolas Maduro wrote  on his Twitter blog, commenting on the new US sanctions.

Sanctions against Venezuela in the United States were imposed in the summer of 2017, and in March 2018 they were extended. In addition to the national cryptocurrency El Petro, the restrictions affected transactions with new debt obligations and securities issued by the Venezuelan government and the state oil company, as well as contracts with a number of existing debt obligations.^[10]

Raising $735 million on the first day of trading

On February 20, 2018, trading began with the national Venezuelan cryptocurrency El Petro, for which the country allocated 5 billion barrels of oil. For the first day, sales amounted to $735 million, Venezuelan President Nicolas  Maduro said on his   Twitter page.

He instructed the oil company PDVSA, petroquimica de Venezuela (Pequiven) and  CVG Corporation to make part of the  purchase  and sale transactions  using El Petro.

Nicolas Maduro

In addition, the president ordered the start of all consular services  at Venezuelan embassies  around the world at El Petro,  and also approved the proposal made by the Venezuelan Airlines Association to purchase fuel for  aircraft for  this cryptocurrency. 

Finally, Maduro allowed the allocation of resources for the creation of student farms for mining cryptocurrencies throughout the country and allowed all savings banks to participate in the process of creating a digital currency and acquire it. 

The cost of one unit of cryptocurrency is equal to the price of one barrel of Venezuelan oil (about $60 as of February 21, 2018). In January, Maduro ordered the release of 100 million El Petro tokens. According to him, the launch of its own cryptocurrency will help the republic increase "monetary sovereignty" and overcome the "financial blockade" by the United States, and will also provide support in the search for new sources of budget revenues.

At the first stage, it is planned to sell 38.4 million El Petro, in the future - 100 million. At the same time, the opposition-controlled Venezuelan parliament declared the cryptocurrency illegal. According to the country's legislation, parliament must approve any state loans.

In early February 2018, the head of Venezuela invited all countries included in the organization of oil exporting countries (OPEC +) to organize the release of their own cryptocurrency, which will be provided with oil reserves^[11]

2017: Creation of cryptocurrency

On December 3, 2017, Venezuelan President Nicolas Maduro announced the creation of his own cryptocurrency called "Petro," provided with reserves of natural resources - oil, gas, gold and diamonds. According to the president, petro will help Venezuela advance in matters of monetary sovereignty, carry out financial operations and overcome the financial blockade. Maduro also announced the creation of the Blockchain Observatory, which will become the "institutional, political and legal basis" for the launch of the Venezuelan cryptocurrency. The Venezuelan Ministry of Finance clarified that cryptocurrency is necessary in order to carry out financial transactions and look for new ways of financing.

Venezuelan President Nicolas Maduro

The statement emphasizes that the sanctions imposed in August 2017 by the presidential administration USA Donald Trump (Donald Trump) negatively affect Venezuela's ability to transfer money through international ones. banks As you know, high-ranking Venezuelan officials, heads state of the oil and gas company PDVSA (Petróleos de Venezuela, S.A.), as well as transactions with debt and securities of the country fell under Washington sanctions. U.S. compliance departments are closely monitoring Venezuela-related transactions, slowing some bond payments and complicating oil exports.

Maduro's decision to abandon the US dollar came after an impressive growth in Bitcoin, confirming signs that the digital currency is gradually gaining momentum in the global investment mainstream. At the same time, Venezuela's national currency, the bolivar, continues to depreciate rapidly in the face of hyperinflation. In November 2017, the cost of bolivar collapsed by another 57%, collapsing by almost 3,000% in 2017^[12]

Notes