Venezuela's President, Nicolas Maduro, could likely explore offering loans based on cryptocurrencies. The target recipient of the service will be the agricultural sector.
The move was not new anymore to the South American nation. For three years, Maduro mentioned that he has been involved in many crypto-related activities, like in the case of petromoneda, the country's own cryptocurrency.
Venezuela Could Offer Crypto-based Loans
According to Morocotacoin. news, a Venezuelan crypto news outlet, Maduro mentioned the proposal of offering crypto-based loans to agricultural industries on Thursday, July 29, during a cabinet meeting.
According to the Latin American leader, what they would grant to the said sector will have low-interest rates for the farmers.
Maduro further said that the country was seeking a new technique to sustain the agricultural sector in the long run.
"I ask you personally to lead the public banking sector and summon the private banks to multiply loans and financing under the mildest conditions for all food producers in the country," Maduro stated during the meeting.
Similarly, what Maduro wants to accomplish is the derivative of the loans under fiat currency.
Despite launching Venezuela's official cryptocurrency, petro in 2018, the president still wants to explore other digital currencies.
Venezuela's Bolivar Saw Significant Drops
Testing waters with cryptocurrency comes with a risk. In Venezuela's case, the focus on cryptocurrency might have an impact on its own monetary unit, bolivar. In fact, when the country has moved to explore crypto, the significant decrease in the value of bolivar has become more evident.
As of June 20, the value of Venezuela's official currency has suffered from an over 10% plunge. As per the dollar price index, the drop has been recorded to nearly 20%, Bitcoin News reported.
Maduro, for this reason, aims to launch bolivar redenomination.
What the government will do is to remove the six zeroes from the existing currency. The reason behind this action is to properly allow the tax calculation, which also involves large amounts of money.
Recent South American Country Involved in Cryptocurrency
Bitcoin in Venezuela has been popular, especially during the past years before its regulation.
Now, the Latin American country has been pushing its strong campaign to embrace having more cryptocurrencies in the transactions. It began when petro has been revealed to be the country's first cryptocurrency.
Last June, El Salvador, another Latin American country, announced that it would adopt bitcoin as an official legal tender.
However, the opposition party in the country has rejected President Nayib Bukele's proposal since the movement might give rise to a series of environmental damages.
As a result, a citizen plaintiff filed a lawsuit against Bukele. The party stated that they came up with the action because the bitcoin implementation in El Salvador lacks a legal basis.
It happened after the World Bank announced its support to the country. Later, the global financial institution rebuked its decision and disallowed the cryptocurrency implementation due to environmental and transparency issues.
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Written by Joseph Henry