“A cryptocurrency that enables us to counter Superman (the U.S.) has been born today,” Venezuelan President Nicolas Maduro made the remarks in his televised speech on Tuesday. Venezuela’s sovereign cryptocurrency “The petro,” which has been available through presale from the day, is part of the Latin American country’s desperate measure to overcome the economic slump that has deepened due to U.S. sanctions. According to Reuters on Wednesday, President Maduro said the cryptocurrency raked in about 735 million U.S. dollars on the first day of presale. However, he stopped short of disclosing who initial investors are. He did not disclose evidence that validates corresponding proceeds from the sales either.
The petro is being issued by placing as collateral 5 billion barrels of crude oil of Venezuela’s massive oil reserves. Venezuela has said the value of the petro will be linked to the price of oil produced in the country, but the exact calculation method has yet to be disclosed. One petro has been priced at 60 dollars by applying a discount during the presale period, and the value of the petro will change in tune with fluctuating oil price. The government plans to circulate 100 million petro, which is equivalent to 6 billion U.S. dollars, and will sell 38.4 million petro during the presale period from Tuesday through March 19. The petro can be purchased only with a hard currency (currency that can be always exchanged with gold or other currency) such as the U.S. dollar, and it cannot be purchased with the country’s own currency Bolivar.
Venezuela’s extremely high inflation has prompted the nation to launch the world’s first sovereign cryptocurrency. The value of Bolivar is at all-time low, and currently one Bolivar is only worth about 0.00004 dollar.
Earlier, the Venezuelan government announced a plan to attract investors from Turkey, Qatar, the United States and Europe, but questions linger over the petro’s credibility. Foreign debts the nation owes amount to 150 billion dollars. Moreover, the United States has been banning its own financial institutions and individuals from engaging in financial transactions with Venezuela and has warned that purchase of cryptocurrency could also constitute a violation of sanctions. The Venezuelan National Assembly controlled by the rightist opposition is insisting that the issuance of the petro without parliamentary approval is illegal.
However, reaction to the petro in the market is not that bad. Bitcoin, the most widely known cryptocurrency, continued to gain value to hit up to 12,279 dollars as of Tuesday after plunging to the 5,900 dollar level on February 6. The Bitcoin’s rebound to the 11,000-dollar level was made for the first time since January 29. Britain’s Express Newspapers reported that presale of the petro could have made contributions to stabilizing of the market to some extent.
If Venezuela, the first country to issue a sovereign cryptocurrency in the world, succeeds in its experiment, other countries under Western sanctions are also expected to make similar trials. For one, Russia is considering a plan to create “Crypto Ruble,” the Financial Times reported last month.