30 Apr

Experts caution that more rules are required in light of Venezuela's projected transition to digital currency.

According to Reuters, the development coincides with Venezuela's national oil corporation PDVSA increasing the usage of digital currency for fuel and crude oil exports. This choice was made in response to the Biden administration's decision not to renew a license with less restrictions. In essence, this resulted in the oil industry in Venezuela facing further sanctions.

Leopoldo Lopez, a leader in the Venezuelan opposition, and Kristofer Doucette, the head of Chainalysis, responded by presenting a study on Monday that demanded action from democratic nations. The financial transactions made since the inauguration of Venezuelan President Nicolas Maduro were reported in detail in their report.

The report recommended that government actions be made to thwart "Maduro's attempts to exploit cryptocurrency to move illicit proceeds into the international financial system."

Venezuela Uses Cryptocurrency to Get Around Oil Sanctions

PDVSA is said to have been gradually increasing its use of digital currency since last year. In particular, the corporation has been selling oil using Tether (USDT) to avoid having its accounts blocked by US oil sanctions.

Earlier, Maduro said that other nations might be interested in doing business with Venezuela. However, if they could circumvent the conventional financial system by using digital currency, they would be prepared to do so.

The report also claimed that other despotic rulers, such as those in Russia and Iran, who are subject to international sanctions, had started their own cryptocurrency initiatives. These programs are a means, according to the research, of avoiding financial systems that use US dollars or euros, which are susceptible to sanctions.

Blocking the cryptocurrency lifeline for sanctioned regimes requires global action

Western nations, especially the US government, received a strong call to action from Lopez and Doucette. According to them, they need to address the cryptocurrency gap that despotic countries are using to undermine the effectiveness of sanctions.

Additionally, the research underscored the necessity of an international endeavor. Cooperation and enlisting new cryptocurrency platforms as major participants would be part of this endeavor. Making sure autocrats are kept off these platforms would be the aim. 

Financial firms and cryptocurrency exchanges were specifically mentioned for their participation in the opposition to the Maduro government. Strong measures must be put in place by these institutions to stop the dictatorship from shifting, laundering, or concealing its assets within the international financial system, according to the report, to block their access.

April 2024, Cryptoniteuae

* The email will not be published on the website.