Venezuela terminates its oil-backed cryptocurrency Petro amid scandal: a failed national cryptocurrency

Once a shining example of financial innovation in Venezuela, the oil-backed cryptocurrency Petro is now bowing out in scandal. Originally introduced as a means to circumvent U.S. sanctions, this digital currency ultimately ended quietly due to its failure to deliver on promises and lack of trust.

Not giving up yet? Venezuela offers 2 Petros as Christmas gifts, but the public prefers to cash out rather than hold onto them.

Maduro's Crypto Dream Comes to an End

In a milestone decision, Venezuela has terminated the operation of its oil-backed cryptocurrency. Launched in 2018 by President Nicolás Maduro, the Petro aimed to circumvent U.S. financial sanctions but eventually fell into corruption and controversy.

Patria Platform Shut Down, Petro Converted to Local Currency

Starting on Monday, January 15th, the exclusive trading platform for the Petro, "Patria," will be shut down. Petro holders have been notified that their wallets will be closed, and any remaining Petro will be exchanged for the Venezuelan currency, the bolívar.

Petro's Launch Met with Obstacles

The Petro was introduced in February 2018, priced at $60 each and backed by oil and mineral reserves. Maduro saw it as a key to entering the global financial market and bypassing sanctions. However, the Petro faced obstacles from the start, causing confusion among the public and being labeled as "suspicious" by rating agencies.

Limited Utility and Mandatory Adoption

Venezuela made efforts to integrate the Petro into its economy, requiring airlines to use it to pay for fuel and making it a fixed payment method in government transactions like taxes. However, its real-world applications remained very limited, creating a peculiar situation where fines issued in Petro could not be paid with the same currency.

Petro's Collapse Amid Corruption Storm

The collapse of the Petro was triggered by last year's corruption scandal, where funds meant for oil operations were misused through cryptocurrencies. Oil Minister Tareck El Aissami resigned, dozens of officials were detained, including senior management of the cryptocurrency regulatory body. This event also dealt a severe blow to the local bitcoin mining industry.

Beyond Petro: The Role of Cryptocurrencies in Venezuela

Despite the Petro becoming history, cryptocurrencies continue to play a significant role in the Venezuelan economy.

With the ongoing inflation of the Venezuelan bolívar, digital currencies like Bitcoin have become a safe haven for many. A 2022 United Nations survey showed that 10.3% of Venezuelans hold cryptocurrencies, surpassing the United States and the United Kingdom.