Venezuela May Continue Crypto Use to Evade Fresh US Sanctions

by | Jun 18, 2024 | Cryptocurrency, News | 0 comments

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Venezuelan dissidents and cryptocurrency analysts predict that the government of Venezuela will continue using cryptocurrencies to circumvent the renewed U.S. sanctions on its oil and gold sectors. Despite corruption cases involving crypto that have affected Nicolas Maduro’s administration, these digital tools are expected to keep diverting funds from traditional financial channels.

The U.S. reimposed sanctions in May, alleging that Maduro has not met the agreements with the U.S. to ensure a fair climate for the upcoming presidential election on July 28. These sanctions target Venezuela’s crucial oil and gold industries, prompting the Maduro administration to resort to alternative methods to sustain its economic activities.

Cryptocurrency has previously been a key tool for the Venezuelan government to evade sanctions. Analysts from Chainalysis, a blockchain security firm, confirm that Maduro’s administration has employed various methods over the years to bypass economic restrictions, with crypto playing a significant role.

Despite recent actions by Venezuelan authorities to halt the cryptocurrency industry, including bitcoin mining, due to a massive corruption scandal involving cryptocurrency and oil sales, crypto remains a primary tool for evading sanctions. This scandal implicated several high-ranking officials, including Joselit Ramirez, the former head of Sunacrip, the cryptocurrency watchdog agency. However, the “Crypto in Venezuela: Two Sides of a Coin” report from the Woodrow Wilson International Center, issued in April, highlights the continued reliance on crypto for these activities.

Chainalysis had previously identified over $70 million in cryptocurrency transactions managed by Sunacrip or individuals close to it, used to streamline transactions. Additionally, PDVSA, the state-owned oil company, has been preparing to shift more of its transactions to USDT, the largest dollar-pegged stablecoin, requiring more than half of each oil shipment’s value to be paid this way.

While Chainalysis could not provide specific data on the number of seized crypto transactions linked to sanctions evasion, the ongoing use of cryptocurrencies by the Venezuelan government to bypass economic restrictions is evident. This strategy allows the administration to maintain financial flows despite international pressures and sanctions.

In summary, Venezuela’s government is likely to persist in using cryptocurrencies to mitigate the impact of U.S. sanctions, leveraging these digital assets to continue its economic activities outside traditional financial systems.

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