íàçâàíèå

Brookings: Venezuela’s Petro Undermines Legitimate Cryptocurrencies

Brookings: Venezuela’s Petro Undermines Legitimate Cryptocurrencies

Brookings Institute analysts recently argued that Venezuela’s oil-backed cryptocurrency, the Petro (PTR), is likelier to harm legitimate cryptocurrencies like Bitcoin and Ethereum, than it is o help Venezuelan’s escape the recession the country is currently enduring.

Through an article published on its website, the think tank first noted that Venezuelan President Nicol?s Maduro claims the Petro raised $735 million in its first day, and that the pre-sale aims to raise a total of $6 billion. As covered by CCN, Maduro claims the cryptocurrency already raked in $5 billion.

Following Venezuela’s footsteps various countries are looking to issue their own national cryptocurrencies as well. While Iran recently backpedaled on bitcoin and revealed it’s planning its own state cryptocurrency, a Turkish lawmaker has argued for a “Turkcoin.”

The Petro is pegged to Venezuela’s oil reserves, and the Petro/bolivar exchange rate reportedly includes a discount determined by the Venezuelan government. This, the Brookings Institute argues, means the Petro is subject to “an arbitrary discount factor adjustment, fluctuating oil prices, and a corrupt government known for manipulating its currency.”

The think tank adds:

The century-old think tank further notes that foreign investors exclusively funded the Petro’s pre-sale, leading to an influx of capital that shouldn’t occur as Venezuela is subject to international sanctions. Since the government only accepts hard currencies, bitcoin or Ethereum for the Petro, Venezuelan’s aren’t able to purchase the oil-backed cryptocurrency.

Per the institute, the Petro was essentially a deceitful way for the government to raise capital, one that won’t help its citizens. Moreover, it’s unclear what use the Petro has for foreign speculators, as the cryptocurrency’s whitepaper claims it will be used to pay for taxes, fees, and public services in Venezuela.

As covered by CCN, Nicol?s Maduro has ordered state-owned companies and the country’s airlines to accept the Petro. Despite its presumed adoption in Venezuela, foreign investors won’t even be able to exchange it for a barrel of oil.

Circumventing sanctions

Effectively, the Brookings Institute argues that the Venezuelan government is taking advantage of speculator hype in the cryptocurrency space to circumvent sanctions, by accumulating foreign currency.

The article reads:

Nations looking to issue their own cryptocurrencies may follow Venezuela’s footsteps. Venezuela’s strategy, analysts note, is to raise money through a cryptocurrency backed by a government-controlled asset, raise money, and proceed to manipulate the cryptocurrency to maximize profit.

This may be setting a dangerous example. While ‘legitimate cryptocurrencies’ prioritize decentralization, security, and transparency, the Petro “provides no real service for its international holders.” Adding to that, the Venezuelan government has announced a new precious-metal backed cryptocurrency, the Petro Gold.

Once speculators find the Petro has no long-term value, Brookings argues, the idea that cryptocurrencies facilitate fraud may be strengthened. Moreover, the power of sanctions may erode if countries are able to bypass them using cryptocurrencies. If so, they may act more aggressively when facing sanctions.

The think tank’s piece concludes:

Featured image from Shutterstock.

14.03.2018 / 15:45 17
US Lawmaker Presses Treasury on Venezuela's Petro Sale US Lawmaker Presses Treasury on
Florida senator Bill Nelson has joined the ranks of those hitting out at Venezuela's recently launched petro token. In a letter sent to Treasury
Venezuela Sold $5 Billion in Petro Cryptocurrency, Claims President Venezuela Sold $5 Billion in Petro
Venezuelan President Nicholas Maduro has claimed the successful launch and sale of Petro — the first ever state-issued cryptocurrency. Petro
Venezuelan President Claims Petro Pre-Sale Raked in $5 Billion Venezuelan President Claims Petro
Venezuelan President Nicol?s Maduro claimed the pre-sale of the country’s oil-backed cryptocurrency, the Petro (PTR), has raised $5 billion and
Venezuela to Auction Petro via Its Dicom Foreign Exchange Platform Venezuela to Auction Petro via Its
According to Venezuelan vice president Tareck El Aissami, the country’s oil-backed cryptocurrency Petro (PTR) will be auctioned to private companies
Venezuela Launches Free Cryptocurrency Training Course For Citizens Venezuela Launches Free Cryptocurrency
The Venezuelan government launches a free training course to teach its citizens how to buy, sell and mine cryptocurrencies following launch of Petro
Venezuelan President Orders Airlines to Accept Petro, Cryptocurrencies for Tickets Venezuelan President Orders Airlines to
Venezuela’s oil-backed cryptocurrency keeps making headlines, as the country’s cryptocurrency superintendent, Carlos Vargas, recently announced that
Comments (0)
Add a comment
Comment on