Venezuela has decided to terminate the petro cryptocurrency launched by its President Nicolas Maduro six years ago to avoid US sanctions.
According to AFP, the petro, touted by Maduro as a solution to Venezuela's economic challenges, never took off and became involved in a graft scandal.
Venezuela's President Nicolas Maduro delivers a speech during a press conference to launch the international trading of oil-backed cryptocurrency called "Petro", on October 1, 2018.
Petro Crypto in Venezuela Goes Offline
An announcement on the Patria Platform website informed users that all crypto wallets held on the platform will be closed on Monday, January 15. Patria Platform is the only website where the petro was tradeable.
The message on the site also said that any remaining petros would be converted to bolivars, the currency of Venezuela. Launched in February 2018 with grandeur, the petro was backed by Venezuela's extensive oil reserves and initially priced at $60 per unit.
Nicolas Maduro envisioned it as a tool to enable new forms of international financing as the country grappled with economic sanctions imposed by the United States.
Despite these ambitions, the petro faced numerous challenges, with citizens finding it difficult to understand how to use it. Some risk rating bodies even labeled it a "scam," according to AFP.
Attempts were made to revive the cryptocurrency in 2020, including mandates for airlines to use petros for fuel payments. The country even required citizens to pay for certain state services using the crypto token. However, the petro's practical applications remained limited, primarily confined to specific state operations such as tax payments.
Although traffic fines were denominated in petros, there was no mechanism for citizens to settle these fines using the cryptocurrency. The government even compelled banks to report their balances in both bolivars and petros.
The Patria Platform, primarily utilized by the government for subsidy disbursement, featured an auction system for users to exchange petros for bolivars. However, its complexity and restricted functionality contributed to its lack of popularity.
Petro Crypto's Demise
The demise of the petro was accelerated by a corruption scandal that unfolded in the previous year, exposing irregularities in the management of funds linked to oil operations involving crypto assets.
The scandal led to the resignation of Tareck El Aissami, the former petroleum minister, and the arrest of numerous officials, including high-ranking members of the Sunacrip crypto regulator.
This crackdown on corruption extended to bitcoin mining operations in Venezuela, where cryptocurrencies like bitcoin served as a popular hedge against hyperinflation and the bolivar's devaluation.
Despite the petro's failure, cryptocurrencies remain relevant in Venezuela, as evidenced by a survey presented at the United Nations Conference on Trade and Development in 2022, indicating that 10.3 percent of Venezuelans own crypto - a higher percentage than in the United States and the United Kingdom.
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