When Venezuela launched its Petro cryptocurrency formally in March, it did not take long for the U.S. to block U.S. companies and individuals from having anything to do with it. A Russian bank may have just come to its rescue.
The Petro continues to soar over the Venezuelan financial landscape. Photo: Trillions.
The Petro, the first state-backed digital currency in the world, was launched for pre-sales by the Government of Venezuela on February 20, 2018. It was released for regular distribution in March. Its purpose, though not always stated so bluntly, was to find a way for the country to get around the existing global banking system and duck tough sanctions and asset freezes held against it by the U.S. and the European Union. Unlike other digital currencies, the Petro is also backed by actual Venezuelan oil resources.
Initial sales of the Petro were strong. The Venezuelan government even bragged that over $1 billion worth of the Petro were sold in just the first few days of its offering.
The U.S. watched the emergence of this new cryptocurrency with some concern. Soon after its formal launch in March, President Donald Trump issued an executive order prohibiting U.S. citizens and companies from making any transactions “related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token” issued by the government of Venezuela.
That effectively blocked most major financial institutions worldwide from having anything to do with the Petro.
Based on information recently uncovered by the Associated Press, it appears that Russia’s Evrofinance Mosnarbank has just ridden in as a white knight to help save the day.
The arrangement with Evrofinance Mosnarbank allows for investors wanting to buy the Petro to do so in a couple of simple steps. First, they had to download the Petro’s wallet software. Then they had to wire a minimum of €1,000 to a Venezuelan government account at Evrofinance. The wallet would then register the equivalent value in Petros in their digital wallet.
It was certainly a logical move for this particular bank to step up and offer help. Since 2011, Evrofinance has been 49% owned by Venezuela’s government. The remaining 51% is owned by the Russia state-controlled VTB bank and Gazprombank. The decision by Evrofinance to back the Petro also supports statements by President Maduro of Venezuela not long ago, who said after the Trump executive order was issued that the Petro would be able to trade for several major international currencies – including the Russian ruble.
It is also expected that the Petro may be exchangeable for Russian’s own planned national cryptocurrency, the CryptoRuble. Based on initial statements from within the Russian government, that currency may be launched sometime later this year.
All this may make Venezuela’s expected second cryptocurrency, the Petro Oro, launch to even bigger success. It will be backed by a mix of precious metals owned by the country.