Venezuela Says $735 Million Raised in Initial Sale of Oil-Backed “Petro” Crypto Token

The petro is the first digital currency to be issued by a federal government. Its sale aims to pull Venezuela’s economy, battered by hyperinflation and US sanctions, out of hardship.

Venezuela Says $735 Million Raised in Initial Sale of Oil-Backed “Petro” Crypto Token
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Venezuela raised $735 million in the first day of the pre-sale for its "petro" cryptocurrency, the country’s president Nicolas Maduro said in his Twitter account.

The currency sale was designed to pull the country out of economic deadlock. Maduro has been hoping that the petro will allow Venezuela to survive US sanctions.

The country’s currency bolivar has recently dropped to record lows. Venezuela struggles with hyperinflation and a socialist economy that is in trouble.

Maduro is hoping the petro will allow the suffering OPEC member to skirt U.S. sanctions as the bolivar currency plunges to record lows and it struggles with hyperinflation and a collapsing socialist economy.

Maduro did not give details about the initial investors and there was no evidence presented for his figure. He added that tourism, some gasoline sales, and some oil transactions could be made in petro.

Petro critics voice concern

The petro is not likely to attract significant investment, according to blockchain experts. According to the country’s opposition leaders, the petro sale is an illegal debt issuance and is not in line with the country’s legislature. The US Treasury Department has warned it may violate sanctions levied last year.

“Today, a cryptocurrency is being born that can take on Superman,” said Maduro, according to Reuters, using the comic character to refer to the United States.

The Venezuelan government has outlined its plans and expectations for the petro in a website built for the cryptocurrency and hosted by the country's Ministerio del Poder Popular para Educacion Universitaria Ciencia, Tecnologia (MPPEUCT).

Based on price of oil

The government has announced the oil-backed token as a form of legal tender that can be used to pay taxes, fees, and other public needs. The token’s price will be based on the price of a barrel of Venezuelan oil from the previous day, according to the website.

The petro is the first digital currency to be issued by a federal government. However, the initiative has attracted stark criticism, including from lawmakers both inside and outside of the country.

The official website for the petro has published a guide to setting up a virtual wallet to keep the cryptocurrency. The petro will go public next month.

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The government was expecting to draw investment from investors in Turkey, Qatar, the US and Europe, according to the Venezuelan Cryptocurrency Superintendent Carlos Vargas.

The value of the total petro issuance of 100 million tokens is estimated to be just over $6 billion.

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However, no new price information was supplied on Tuesday. The tokens are each designed to be valued at and backed by a barrel of Venezuelan crude oil. Madura’s government is the victim of an economic war led by opposition politicians with the help of the US President Donald Trump, according to Maduro.

Washington has last year levied sanctions, blocking US banks and investors from acquiring newly issued Venezuelan debt. This prevents the country from borrowing abroad so that it can bring in new hard currency or refinance existing debt.

Despite being previously disclosed in a whitepaper provided by the government, the petro will not be a token on the Ethereum network. 

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