With the whack of a pen, President Donald Trump may have just done what most observers thought undoable: he has made the Petro significant. The Petro— Venezuelan government’s “cryptocurrency”—- bowled out in February of this year and substituting the very dispersed governance structure of Bitcoin and Ethereum with the fundamentally consolidated guidance of
President Nicolas Maduro’s regime.
President Trump’s executive command states that “in light of recent actions taken by the Maduro regime to attempt to circumvent U.S. sanctions by issuing a digital currency… 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.”
The initial reply of the crypto community to the executive command is fairly focused not on the Petro itself, but on what it says for the probability and feasibility of potential future prohibitions of cryptocurrencies that people really want.
It is not a big jump in legal terms from this prohibition to an executive command banning something like Bitcoin.
Bitcoin users must, hence, sound the alarm on the Petro prohibition, despite that precise digital currency’s flaws. But they also have to do more to reconcile the idea that Bitcoin will one day trump over government fiat currencies with its current susceptibility to potential government prohibitions.
If it is just a problem of Bitcoin use attaining a critical mass before the writing is on the wall for fiat currencies, then it is a secure bet that governments will take action before that dangerous mass is reached.
In addition to increasing robust resistance to such a prohibition, it’s also possible to be more practical and grow cryptocurrency applications that provide worthwhile existing together with the existing order. That may not be what Bitcoin’s most dedicated early adopters want, but it’s a product worth at least expecting.
Cryptocurrencies defy that “just ban it” approach that says if something is bad, the government can and should make it disappear. Were need high enough, it is not well-defined that a government prohibition on a cryptocurrency would even be likely. But that is almost surely not the case with the Petro, and probably not yet the case at the present level of adoption for Bitcoin and other actual cryptocurrencies. The best reply is to both nurture public opinion against this and any future cryptocurrency prohibitions, while also thinking about ways that various types of money can coexist.
The Petro may be principally a punchline, but prohibition it raises many actual issues.