El Petro is now legal tender in Venezuela. According to an official gazette notice, all government institutions are now required to adopt the digital currency for all their transactions.
Government bodies now have four months commencing April 6 to comply, the decree by President Nicholas Maduro says.
The National Cryptocurrency Treasury, a specially devised financial unit has been charged with regulation the oiled backed digital currency. It will be headed by Abraham Landaeta. Anthoni Camilo will be in charge of virtual exchanges. The body will oversee several aspects of the implementation from the release of tokens to trading.
President Maduro’s government is banking on the virtual currency to save the ailing economy struggling from crippling sanctions. The IMF has projected this year’s inflation rate to be 13,000 per cent.
Nicholas Maduro has been the face of the cryptocurrency that has been dismissed by some as a scam. El Petro is widely seen as a ploy to circumvent international sanctions placed against the country.
President Trump dealt a blow when he signed an executive order last month banning the cryptocurrency in the US. The order also barred US citizens from investing in in it.
Circumventing Sanctions
The US Treasury had long expressed concern about the Petro as a clever way of ducking sanctions. The department had described the move as “another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”
A unit of El Petro is backed by one barrel of Venezuela’s extensive oil reserves, according to its whitepaper. The National Assembly gave a green light last week when it passed a bill allowing the cryptocurrency.
The virtual currency is said to have generated $735 million during its presale, the president said in February days after launching it. He would later put the figure at $5 billion. According to him, the crypto had attracted investors from Russia, China and Mexico.
Venezuela is said to have received technical support from Russia in the development of the virtual, according to a report by Time magazine.
Last week, Maduro said 30 ambulances had been purchased using El Petro. The government now expects it to go mainstream.
Petro Zones
Petro zones where the virtual currency will be in every day use have already been sanctioned. The zones have been strategically placed in tourist zones.
A total of 100 million PTR was set to be issued for sale.
There are still several grey areas about the cryptocurrency. Hong Kong-based Bitfinex exchange reportedly refused to list it for lacking clear utility. The exchange also said listing it might amount to helping Venezuela circumvent international sanctions.
Despite the government backing, bitcoin remains a more popular cryptocurrency for many Venezuelans indicating a lack of confidence.