Venezuela’s Petro Cryptocurrency to Cease Operations on Jan 15
The Petro, Venezuela’s ill-fated cryptocurrency launched in 2018, is set to shut down on January 15. Despite its introduction as a means of evading United States sanctions and stabilizing Venezuela’s economy, the Petro failed to gain significant adoption throughout its existence.
The official announcement of the Petro’s shutdown was made on a government-run website dedicated to the cryptocurrency, but at present, the website is inaccessible. The administrative section of the Venezuelan Patria website, which served as the sole platform for Petro trading, can now only be accessed with a password.
Initially, the Petro was unveiled as an oil-backed cryptocurrency in response to the significant devaluation of Venezuela’s fiat currency, the bolivar, caused by U.S. sanctions. However, the Petro struggled to gain traction, especially as Bitcoin had already established a strong presence in the country.
Venezuelan President Nicolas Maduro mandated the issuance of the Petro, despite facing opposition from the parliament. Nevertheless, despite achieving full functionality in 2020, the Petro failed to gain widespread adoption both domestically and internationally.
Efforts were made by the Maduro government to promote the Petro to the member states of the Bolivarian Alliance for the Peoples of Our America, but these attempts did not lead to its widespread acceptance.
One notable aspect is that the Petro was never declared legal tender within Venezuela, meaning that acceptance of the cryptocurrency was not mandatory. Even the country’s largest bank, Banco de Venezuela, refused to accept Petro without a presidential order compelling it to do so.
In a dramatic turn of events in June 2020, Joselit Ramirez Camacho, the head of the National Superintendency of Crypto Assets responsible for overseeing the Petro, was indicted by the U.S. Immigration and Customs Enforcement for alleged ties to international narcotics trading. The authorities offered a $5 million bounty for his capture.
Ramirez Camacho was eventually arrested in Venezuela in March 2023 on charges related to financial improprieties within the national oil industry. As a result, the agency under his leadership was closed for reorganization, and the closure has been extended until March 2024. This crackdown also led to the closure of various crypto exchanges and mining operations in the country.
It is important to note that the Petro was not a central bank digital currency (CBDC), although the Central Bank of Venezuela had announced plans to create one in 2021. Unfortunately, these plans never materialized, leaving the Petro as a failed attempt to navigate the economic challenges faced by Venezuela.
Furthermore, in March last year, state regulators ordered a halt to mining cryptocurrencies after uncovering a corruption scheme where crypto wallets redirected payments that were owed to the state-run oil company, Petróleos de Venezuela.
As the Petro bids farewell on January 15, its demise serves as a cautionary tale about the complexities and challenges of launching a national cryptocurrency. Despite the high hopes and initial goals, the Petro ultimately proved to be a failed experiment in overcoming economic hurdles and evading international sanctions.
