Venezuela Launches Pre-Sale of Its Controversial Oil-Backed Cryptocurrency

Nicolas Maduro Venezuela's president addresses members of the media during a press event in Caracas Venezuela

Nicolas Maduro Venezuela's president addresses members of the media during a press event in Caracas Venezuela

Lawmaker Jorge Millan claimed recently that the Petro was not a cryptocurrency, but a forward sale of Venezuelan oil.

Venezuela launched the presale of its own cryptocurrency, the petro, today. "Venezuela is arguably defaulting on its debts, and unless one really believes that this is merely due to outside financial sanctions, there is no reason why this could not happen with the Petro as well".

Meanwhile, consulting firm Eurasia Group estimates that although Venezuela could raise some $2 billion in the initial offer, it is "unlikely" that the Petro will be established as "a credible means of exchange", beyond short term "interest". The token is said to be backed by commodities, including oil, of which the country has notable reserves.

But critics point out that for now sale of the petro will only be in dollars - a sign of how much Venezuela's own currency, the bolivar, has melted under four-digit inflation.

Some investors say it's innovative nonetheless, and could draw investment from Middle East, Europe and Asia. "I announce as a proposal that I will take to the pertinent instances, to call, on the day of the Presidential elections, elections for the National Assembly also to fill that void”, Cabello said during a live interview on state televisión network".

Trump "campaigned promising non-interference in the internal affairs of other countries", Maduro tweeted on Monday. "The time has come to fulfill that and change his agenda of aggression to one of dialog".

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To fuel demand for the Petro, it will be accepted as payment for local taxes.

Venezuela's opposition-run parliament has expressed its disapproval of the petro and has warned investors that after Maduro leaves office, the currency would become null and void.

In 2017, the US sanctioned nearly 50 Venezuelans for undermining democracy, according to the State Department. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

"My advice would be to tread very carefully with this - especially considering the track record of the Venezuelan government", said Federico Bond, co-founder of Signatura, a digital currency startup based in Argentina. Since the start of this Administration, President Trump has asked that Maduro respect Venezuela's constitution, hold free and fair elections, release political prisoners, cease all human rights violations, and stop oppressing Venezuela's great people.

Secretary of State Rex Tillerson said on a recent trip to Latin America that the United States is considering a ban on Venezuelan oil, the only viable source of income for Maduro's government.

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