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Venezuela’s Oil Giant PDVSA Turns to Crypto amidst Heightened Sanctions
Amid renewed sanctions from the United States government due to President Nicolás Maduro’s failure to fulfill electoral agreements signed in 2023, Venezuela is embracing crypto to navigate the economic challenges. Reuters reported on April 22, citing three people familiar with the matter, that PDVSA, the state-owned oil company, has shifted its focus towards utilizing crypto for oil and crude exports to manage the situation.
PDVSA to Use USDT for Oil and Crude Exports
The Venezuelan oil giant has turned to Tether’s stablecoin USDT to conduct its business offerings and potentially minimize the risk of having its oil sales revenues frozen in overseas bank accounts due to the reissued US government sanctions.
The US Treasury Department instructed PDVSA’s customers, including buyers and sellers, to complete transactions under a general license, which the department did not renew due to the lack of electoral reforms before the end of May.
The move impedes Venezuela’s efforts to boost oil production and exports, as companies now require specific US approvals to conduct business with the country.
However, by transitioning to crypto, PDVSA aims to sustain its operations, avoid disruptions caused by US interventions, and ensure a smooth experience for its customers.
Since last year, the company has been exploring using the USDT stablecoin, pegged 1:1 to the US dollar value, to conduct its business. According to Reuter’s report, PDVSA plans to increase its use of digital assets to manage the reimposed sanctions on the country’s oil sector.
PDVSA Requires Half Cargo’s Value in Crypto Prepayment
Reuters reported that PDVSA had recently begun accepting crypto payments for certain spot oil contracts that do not involve swaps. The company initiated the practice of requiring customers to prepay for half of each cargo’s value in USDT during the first quarter of this year.
Furthermore, the state-owned oil company now mandates that new customers seeking to engage in oil transactions must possess cryptocurrencies stored in a digital wallet. These requirements also extend to some older contracts that did not initially specify the use of USDT.
This shift towards crypto adoption by PDVSA highlights Venezuela’s openness to embracing new financial innovations within its oil and gas sector.
In a recent statement to Reuters, Venezuelan oil minister Pedro Tellechea said the nation is considering using digital currencies for certain oil contracts.
“We have different currencies, according to what is stated in contracts,” said the Venezuelan oil minister.
Meanwhile, before the rise of the crypto economy, the oil market heavily relied on the US dollar as the preferred currency, with transactions universally denominated and settled in US dollars. This reliance stemmed from the introduction of the “petrodollar” system in the 1970s, solidifying the US dollar’s status as the primary currency for global oil trade.next
Venezuela’s Oil Giant PDVSA Turns to Crypto amidst Heightened Sanctions
Source: https://www.coinspeaker.com/venezuela-oil-pdvsa-crypto/