Venezuela's national cryptocurrency, the Petro (PTR), is reportedly shutting down on January 15, according to press reports, marking the end of an ambitious but ultimately unsuccessful attempt to circumvent U.S. sanctions. Launched in 2018 amid a sharp decline in the fiat bolivar and the rise of Bitcoin within the country, the Petro was envisioned as a state-run, oil-backed cryptocurrency by President Nicolas Maduro, despite opposition from the Venezuelan parliament.
Petro's Struggles: Limited Acceptance and Scandal
The Petro, which achieved full functionality in 2020, struggled to gain traction both domestically and internationally. Despite efforts by the Maduro government to promote it within the Bolivarian Alliance for the Peoples of Our America (ALBA), the coin was never traded abroad. Domestically, its use was limited as it was never made legal tender, and even the Banco de Venezuela, the country's largest bank, accepted it only under presidential directive.
Legal Troubles and the U.S. Bounty
Adding to the Petro's woes, Joselit Ramirez Camacho, head of the National Superintendency of Crypto Assets overseeing the Petro, became the target of a U.S. Immigration and Customs Enforcement bounty in 2020 due to alleged ties to international narcotics trading. Camacho's arrest in March 2023 for financial irregularities within Venezuela's national oil industry led to the closure of the agency he headed and sparked an investigation that shut down various crypto exchanges and mining operations in Venezuela.
The Distinction from CBDCs and Unfulfilled Plans
Notably, the Petro differed from a central bank digital currency (CBDC), with Venezuela's Central Bank announcing plans for a CBDC in 2021 that never materialized. The Petro's shutdown thus underscores the challenges and complexities involved in launching a successful national cryptocurrency, especially in a geopolitical context marked by sanctions and financial instability.
A Cautionary Tale in National Cryptocurrencies
The demise of the Petro serves as a cautionary tale about national cryptocurrencies' viability and the intricacies of integrating such digital assets into a country's economic and political fabric. While the concept was innovative, the Petro's lack of acceptance and entanglement in controversy ultimately led to its downfall.
