Venezuela's President Nicolas Maduro speaks during the event launching the new Venezuelan cryptocurrency Petro in Caracas Thomson Reuters CARACAS (Reuters) - President Nicolas Maduro said Tuesday that Venezuela had received $735 million in the first day of a pre-sale of the country's "petro" cryptocurrency, aimed at pulling the country out of an economic tailspin.
Critics have described it as a desperate attempt to raise cash for the country to repay its $150 billion of foreign debt.
The petro is different from almost all other cryptocurrencies in that it has the enthusiastic support of the state; Russian Federation reportedly also has considered creating its own cryptocurrency to skirt global sanctions.
After four years of a worsening economic crisis, the Petro could be one way for Venezuela to circumvent American and European sanctions that prohibit traditional investment in the country due to its authoritarian regime. The short answer is: "It simply can't". After the Constituent elections in late July, the USA initiated a fresh round of sanctions against Maduro himself as well as other of his top officials, but the aggressive power grab continued undeterred with governor and mayor elections that the opposition also denounced.
"They have been trying to figure out ways to get around anti-money laundering sanctions provisions, and crypto is maybe one way they can do that", Toro told CNBC. "I do think that part of this is about getting investors from non-traditional lenders, from Russian Federation and China, to put in some more money, to lend fresh cash".
Venezuela is introducing a new cryptocurrency as the economy struggles to cope with USA sanctions and hyperinflation.
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Conflicting details aside, Venezuela's plan represents the first time that a country has moved to issue its own cryptocurrency.
The presale was launched Tuesday and is planned to last into next month. The government says that citizens will be able to use the Petro to pay "national taxes, fees, contributions and public services". "It is tailor-made for corruption".
Venezuelan leaders face an unprecedented economic crisis, and their currency is nearly worthless. Food and medicine in the country have become scarce.
Venezuelan citizens cross the Simon Bolivar worldwide bridge from San Antonio del Tachira in Venezuela to Norte de Santander province of Colombia on February 10, 2018.