Venezuela to issue $5.9B in oil-backed cryptocurrency

caracas — President Nicolas Maduro said that Venezuela would issue 100 million units of its new oil-backed cryptocurrency in coming days, although it is unclear whether any investors will want to purchase the “petro” at a time when the Opec member is going through a deep economic crisis and its leftist government has little credibility.

Socialist Maduro surprised many last month when he announced the launch of the cryptocurrency, to be backed by Venezuela’s oil, gas, gold and diamond reserves, as a way to circumvent US sanctions that have hurt Venezuela’s access to international banks. Maduro specified on Friday that each unit of the currency would be pegged to Venezuela’s oil basket, which last week averaged $59.07 per barrel, according to the oil ministry. That implies the total cryptocurrency issued would be worth just over $5.9 billion.

There is much confusion, however, over how the mechanism will work. Opposition politicians have already panned the project as a fanciful idea doomed to fail and useless at getting food to the millions who are suffering from product shortages and the world’s

I have ordered the emission of 100 million petros with the legal sustenance of Venezuela’s certified and legalised oil wealth

Nicolas Maduro, President of Venezuela

highest inflation. Maduro says the cryptocurrency will usher in the “21st century” and boost Venezuela’s access to hard currency.

“I have ordered the emission of 100 million petros with the legal sustenance of Venezuela’s certified and legalised oil wealth,” said Maduro in a state television address. “Every petro will be equal in value to Venezuela’s oil barrel.”

Venezuela has the world’s largest oil reserves, according to Opec, and makes some 95 per cent of its export revenue from oil. Critics say the government has squandered wealth from a decade-long oil boom and that without reforms any influx of resources will also be burned through. — Reuters