Venezuela’s government is slowly allowing the use of dollar-tied cryptocurrencies in currency exchanges for the private sector, a dozen sources said, as U.S. restrictions on oil exports reduce available foreign currency.
Sanctions by the United States, which the Venezuelan government has characterized as “economic war,” prevent many business transactions, forcing companies seeking to buy raw materials from abroad to exchange local bolivars for dollars that are generated by the oil trade and foreign card transactions and are injected into exchanges by the central bank.
But oil revenue has taken a hit in recent months.
Though the United States Treasury Department last month issued a new, restricted license to Chevron allowing it to export oil after a three-month pause, the license blocks any payments to the government, reducing the quantity of dollars available for exchange.
In response, the Venezuelan government has since June allowed the use of more USDT, a digital currency also known as Tether, whose value is pegged to the U.S. dollar and designed to maintain a stable value, according to the private and financial sector sources, who asked to remain anonymous for fear of repercussions.
The use of digital currencies helps keep the economy operating amid the sanctions, including domestic production of basic goods such as food.
“When one operation closes, others open,” said one business person about the use of crypto.
Another source estimated the use of crypto will grow. State-run oil company PDVSA has since last year been slowly increasing its digital currency usage and moving sales to USDT, sources told Reuters last year.
Tether did not respond to a request for comment, but said last year it respects the U.S. Treasury’s list of sanctioned entities.
Neither the Ministry of Communications nor the central bank responded to questions, but Vice President Delcy Rodriguez said during an August meeting with business people that “non-traditional mechanisms of management in the exchange market” were being implemented, without providing more details.
The sources said a limited number of banks sell the cryptocurrencies, usually USDT, to some businesses in exchange for bolivars. The businesses must have a digital wallet approved by the authorities and receive the value of the transaction there.
Businesses are then free to either sell the crypto or use it to pay domestic or international providers.
There are no official figures for crypto sales, but local analyst firm Ecoanalitica has estimated that $119 million in cryptocurrencies were sold to the private sector in July.
The Venezuelan central bank injected some $2 billion into the currency exchange market in the first seven months of the year, 14% less than during the same period last year, according to estimates by the private and financial sectors.
The restrictions on the Chevron license might further reduce the availability of foreign currency, analysts have estimated. Oil exports declined about 10% in July from the previous month, according to vessel tracking data and company documents.
“The availability of exchange always has a ceiling,” said lawmaker Orlando Camacho, who is close to the ruling party and the head of a guild for medium-sized companies. “The role of companies is also to guarantee foreign exchange through their exports.”
(Reporting by Reuters Editing by Rod Nickel)