According to reports, Venezuela’s national oil and gas corporation PDVSA is considering increasing its adoption of cryptocurrencies, specifically Tether (USDT), which is the largest stablecoin in terms of market value, as a means to bypass US restrictions.
In 2023, the Venezuelan oil company began introducing USDT as a payment option for oil sales, and it’s said that the company now requires all new clients to have a digital wallet capable of storing cryptocurrencies.
Venezuela Turning to USDT for Oil Exports
Based on Reuters’ reporting, PDVSA is pushing to increase the use of US dollars (USDT) for exporting crude and fuel following the US decision not to renew a permit that temporarily eased sanctions in Venezuela’s oil and gas industry. According to sources familiar with the situation.
In October, after President Nicolás Maduro pledged for a free and fair election to take place in 2024, a general permit was given out. As a result, Venezuela’s oil exports reached an impressive 900,000 barrels per day (bpd) in March, marking its highest export volume in the past four years.
Yet, it seems the Venezuelan administration under Maduro’s leadership didn’t keep their promise, resulting in the US letting the license expire and reapplying sanctions against the country.
If no renewal is granted, PDVSA’s business dealings with its clients and suppliers must be concluded by May 31. This may lead to growing challenges for Venezuela in exporting crude oil, based on Reuters’ report.
Due to restarted oil and gas penalties, PDVSA of Venezuela aims to increase the utilization of US Dollars Tangible (USDT) for transactions, a method they initiated last year, to minimize the risk of earnings being seized in external bank accounts due to the sanctions.
Beginning in Q1 2024, the Venezuelan oil company initiated a new contract model for non-swap oil deals where fifty percent of each cargo’s value needed to be paid upfront in US Dollars Tether (USDT).
According to reports, PDVSA now requires new clients as well as those with older contracts to have a digital wallet supporting cryptocurrency in order to do business with them. This condition applies even to contracts that originally did not mention using USDT (Tether).
Crypto Coming to the Rescue in Venezuela
In the meantime, using cryptocurrencies instead of dollars for oil and gas deals is uncommon due to the US dollar’s widespread use and popularity in international trade.
A trader who talked to Reuters explained that it’s necessary to go through intermediaries to utilize USDT in oil transactions since these deals don’t undergo trade compliance checks.
Yet, relying on intermediaries for digital currency transactions is a help for PDVSA in bypassing sanctions, but this comes at the cost of decreased oil revenue for the company.
Venezuela has used crypto as an alternative before to bypass US sanctions; in 2018, they launched a government-run, oil-backed digital currency named Petro.
However, the Petro cryptocurrency failed to gain broad acceptance and faced increasing criticism both domestically and internationally. Approximately six years following its introduction, rumors emerged that the Venezuelan administration planned to discontinue the Petro in January 2024.
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2024-04-24 01:11