Venezuela is currently facing a financial collapse and the country’s economy is currently on tenterhooks. Having face sanction from the U.S in recent times, the country’s economic condition has exacerbated where inflation has gone to a record high of 13000 percent and now nearly 30% of the unemployment rate is bothering the country big time.
Adding to the further woes, U.S President Donald Trump on Monday signed an executive order that prohibits United States resident from buying the Venezuelan cryptocurrency Petro. The order prohibits Americans, starting January 9, 2018, from participating in any transactions involving ‘any digital currency issued by, for, or on behalf of the Government of Venezuela.’
The order authorizes U.S. Treasury Secretary Steven Mnuchin to impose regulations and enforce the directive. Secretary Mnuchin said: “President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course… the Maduro regime is attempting to circumvent sanctions through the Petro digital currency– a ploy that Venezuela’s democratically-elected National Assembly has denounced and Treasury has cautioned U.S. persons to avoid.”
Earlier in January, The Treasury Department further warned investors to avoid the Petro, calling it “another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”
Venezuelan President Nicolas Maduro launched the Petro cryptocurrency last year to circumvent U.S. sanctions and attempt to rescue the country’s failing economy. The introduction of this new ban will further complicate matters for the Maduro government in order to boost its foreign reserves using a digital token.
Diosdado Cabello, Vice President of Venezuela’s United Socialist Party, responded to Trump’s executive order by tweeting (translated from Spanish): ‘Once again, imperialism is mistaken in announcing sanctions and blocks against the brave and dignified people of Venezuela. The treasonous footmen drool with pleasure when our people suffer. Raise the flags of Bolívar and Chávez—we will prevail!’
In a word to the Bloomberg, Russ Dallen, the managing director at Caracas Capital, said: “It’s a pretty big blow. Since most cryptocurrencies are not actually backed by anything real, cryptocurrency speculation is based on the greater fool theory — I can buy this at $100 because there is someone who is a bigger idiot who is going to buy it at $200. When you take the U.S. out of that equation, you reduce the interest and potential for that speculation.”
