On Monday, U.S. President Donald Trump signed an executive order imposing sanctions against Venezuela’s controversial “petro” cryptocurrency.
The executive order explicitly states: “All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”
Venezuela launched the petro cryptocurrency in February as it aimed to use it as a way to bypass international sanctions. It is no surprise that the Trump administration took such a move. A number of U.S. lawmakers such as Senators Bob Menendez, Marco Rubio, and Bill Nelson have sternly criticized the petro and written letters to the Treasury Department demanding that American investors should be protected and Venezuela should not be allowed to raise money.
Although the Treasury Department has not responded directly to the letters, it has confirmed that there is a risk for sanctions on Americans buying the token.
Within Venezuela itself, the token has also been received controversially as the nation’s Congress denounced it as unconstitutional and illegal. Even though Maduro claims that up to $5billion was generated through the token’s pre-sale, there has been no proof to back this up.
Jerry Brito, Coin Center executive director said that the U.S. sanctions are “nothing new”: “While Venezuela’s attempt to issue a cryptocurrency is novel, there’s nothing new about the U.S. restricting financial dealings with sanctioned countries. Issuing a cryptocurrency is not going to help Venezuela escape sanctions.”