Venezuela Tries to Avoid US Sanctions By Trading In Rubles and Crypto

Caracas and Russia are in talks to disconnect from USD and exchange rubles and crypto.

May 20, 2019 at 7:30 p.m. UTC

Updated Sep 13, 2021 at 9:13 a.m. UTC

President Nicolas Maduro

Venezuela and Russia are in talks to use the ruble in mutual trade settlements, thereby abandoning the commonly-used US dollar in country-to-country transactions. Further, the two countries are considering using El Petro, Venezuela's oil-pegged cryptocurrency, as another medium of exchange.

Venezuela's UN representative, Jorge Valero, told Russian house organ Russia Today about the upcoming trade plans.

The Petro is pegged to the value of a barrel Venezuelan oil and the national currency, the bolivar, is pegged to the Petro. Venezuela hopes to avoid sanctions by disconnecting from USD and the Petro is an integral part of this process. It is also "swapping crude oil for imported products" according to RT.

RT writes:

The diplomat stressed that the US penalties against the Venezuelan oil sector, along with freezing its dollar accounts, has had an enormous negative impact on the country’s economy. The measures deprived the Latin American nation of free access to international financial support and investments in its oil sector.

The US Treasury imposed sanctions against the Venezuelan government and its crypto exchange Evrofinance after Petro's launch. The treasury wrote that "Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.”

Given there are no open crypto exchanges and no real way to pay with crypto in Venezuela, even after months of effort, this effort to route around sanctions appears aimed directly at getting Venezuela's catastrophically broken government back on track but may or may not have much effect on the local economy.

Image via Shutterstock

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.