The pre-sale of the commodity-backed digital currency ‘petro,’ which has been announced by Venezuelan President Nicolas Maduro, is expected to start on Tuesday. The country hopes this will help to replenish its depleted budget.
The new cryptocurrency will be limited to 100 million units, called the mene. The petro token will be backed by Venezuelan oil, gas, gold and diamond reserves.
Venezuela’s regulator said last week that it would draw investment from Qatar, Turkey and other Middle Eastern countries, as well as from European nations and the US.
The Latin American country is turning to virtual currency as a result of US sanctions, according to Venezuelan journalist and political scientist Francisco Toro.
“They have been trying to figure out ways to get around anti-money laundering sanctions provisions, and crypto is maybe one way they can do that,” he told CNBC.
“I do think that part of this is about getting investors from non-traditional lenders, from Russia and China, to put in some more money, to lend fresh cash. The financial sanctions — the US sanctions, the European sanctions — are not the main reason Venezuela can't raise financing.”
The ‘petro’ cryptocurrency was announced by Maduro at the beginning of December as a way “to innovate toward new forms of international finance for the economic and social development of the country.”
Maduro explained that the purpose of the currency was “to advance the country's monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country.”
“We are facing a financial war against the country which we have denounced, and the opposition has denied. There are business people who are unaffected by Donald Trump's blockade. With this, we will join the 21st century,” he said.
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