Circumventing sanctions : Venezuela's turn to cryptocurrencies

Paul Antonopoulos, Pedro dos Reis Nunes, Drew Cottle

Research output: Chapter in Book / Conference PaperChapter

Abstract

At the start of 2018, facing increasing economic and financial pressure, compounded by sanctions from Western states and internal instability, Venezuelan authorities after examining the possibilities offered by cryptocurrencies, developed their own project – the Petro. The Petro that was devised is a new lifeline to reengage Venezuela with the global financial system despite significant pressures from Washington. Moreover, it underlined the daunting possibility of state-backed cryptocurrencies, developed by states who are sanctioned from accessing the international financial markets and financial mechanisms, to bypass these blockades. The need for this bypassing mechanism evolved from an economic context referred to as the “economic war” by Venezuelan authorities. This context furthered the case for the Petro in the everyday life of Venezuelans, as well as its fundamental characteristics. Expectedly, media criticism levelled against the project is fierce, both from mainstream media and, perhaps more surprisingly, alternative specialist media. The concern resides in the potential contagious effect of other states following the Venezuelan example, developing projects that bypass the traditional financial system, while simultaneously intervening more profoundly in the cryptocurrency universe. This alternative is especially crucial as entering 2019 external pressures against Venezuelan President Nicolás Maduro intensified, along with other states such as Iran who are anti-Washington and are facing toughening sanctions. The crucial question remains whether the Petro can serve as a method to circumvent sanctions and bring about the normalization of the Venezuelan economy that is crippled for a variety of reasons including rampant inflation, and reinvigorate Venezuela’s international trade.
Original languageEnglish
Title of host publicationVenezuela in Focus: Economic, Political and Social Issues
EditorsMatthew S. Bisson
Place of PublicationU.S.
PublisherNova Science Publishers
Pages71-103
Number of pages33
ISBN (Electronic)9781536165043
ISBN (Print)9781536165036
Publication statusPublished - 2019

Keywords

  • economic sanctions
  • cryptocurrencies
  • Venezuela

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