Facing Hyperinflation, Venezuela to Issue Oil-Backed Cryptocurrency

Venezuela, the country plagued by hyperinflation pressures over the past few years, has announced that it will issue an oil-backed state cryptocurrency called the ‘Petro’ in an attempt to shore up its struggling economy. The announcement comes as a result of the massive adoption of Bitcoin in the nation.

The announcement made by President Maduro was met by cheers from the listening crowd, as the leader stated that for Venezuela ‘the 21st century has arrived.’ However, opposition leaders suggested that the cryptocurrency would require congressional approval and would likely never see the light of day.

US sanctions
The rapid decline of the country’s currency, the Bolivar, is at least partially the result of financial sanctions imposed by the US. Maduro is hoping that a cryptocurrency would allow money to move into the country through channels that are not currently accessible by other governments. Maduro said that the new cryptocurrency would allow the country to:

“Advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”

While such a cryptocurrency would potentially offer a means of circumvention for the country’s government, tying it to oil, gas and diamond reserves may prove extremely complex. Some opposition leaders suggest that Maduro may seek to pay outstanding international debts with the state issued currency.