Americans banned from buying Venezuelan cryptocurrency

Americans banned from buying Venezuelan cryptocurrency
Government of Venezuela via Wikimedia Commons

President Trump further cut off Venezuela’s government from American investors on Monday.

Trump signed an executive order banning US citizens from buying Venezuela’s newly created cryptocurrency, the petro, the world’s first sovereign digital currency.

Trump considers Venezuelan President Nicolas Maduro a dictator. Venezuela is in the midst of an unprecedented economic and humanitarian crisis in Latin America. Maduro is seeking re-election in May.

The measure comes after the Trump administration banned American investors from buying newly issued Venezuelan bonds from either the government or the state-run oil company, PDVSA. Treasury Secretary Steven Mnuchin is also meeting Monday with Latin American leaders at the G20 meetings in Buenos Aires, where Venezuela will be a topic of discussion.

Maduro drummed up the petro as a way for his administration to tap foreign investment amid the initial wave of US financial sanctions. The petro went on sale in private auctions in February.

Maduro tweeted at the time that the private auctions raised $735 million, though CNN could not independently confirm that amount. The government said the petro would be backed by Venezuela crude oil reserves, the largest in the world. But investors would not actually have an ownership stake in Venezuela’s oil.

The petro drew criticism from both mainstream investors and cryptocurrency experts. Critics treated it like a joke and a direct conflict to the purpose of digital currencies as unregulated and not controlled by a government.

Venezuela’s government has been slowly running out of money for years. But the pace of the cash drain is accelerating as Venezuelan oil production has plummeted in recent months. The country’s central bank only has $9.4 billion left in reserves, most of which is held in gold bars, central bank filings show. Reserves are meant to serve as a cushion for the economy.

International critics say Maduro will rig the presidential election in May. Many top opposition candidates are boycotting the election for that reason — and Maduro has also banned many of them. There are other candidates, such as Henri Falcon, running for president. But Falcon, a former member of Maduro’s political ideology “chavismo,” has struggled to convince Maduro’s critics that his candidacy is, in fact, legitimate.

Trump’s executive order follows US sanctions he slapped on dozens of Venezuelan leaders last year, including Maduro.