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As hyperinflation and U.S. sanctions disturbed Venezuela’s economy, cryptocurrency is providing services handled elsewhere by the traditional banking system.
It has become a tool to send remittances, protect wages from inflation and help businesses manage cash flow in a quickly depreciating currency, according to interviews with crypto users and experts.
Cryptocurrency in Latin America got renewed attention in June after El Salvador adopted bitcoin as legal t tender. It has grown in popularity in Argentina as inflation resurged.
Chainalysis, a startup that researches blockchain transactions, in a 2020 report ranked Venezuela third on its Global Crypto Adoption Index, largely due to the high volume of bolivar transactions.
In Venezuela, crypto is mainly used to hedge against inflation that causes bank deposits to sharply depreciate in weeks or even days. Venezuelan President Nicolas Maduro in 2017 announced the creation of the state-backed petro cryptocurrency, but it has little practical application. The government used it in 2019 to make small payments to retirees, and often uses it as a unit of value to price services or fines that are ultimately paid in bolivars.
The United States in 2019 imposed broad Venezuela sanctions that block U.S. citizens from dealing with Maduro’s government. While banks can still deal with private businesses or individuals, many avoid doing so due to perceived regulatory risk. cryptocurrency, but it has little practical application. The government used it in 2019 to make small payments to retirees, and often uses it as a unit of value to price services or fines that are ultimately paid in bolivars.
The United States in 2019 imposed broad Venezuela sanctions that block U.S. citizens from dealing with Maduro’s govern The country’s information ministry did not respond to a request for comment.
Fast food chains Pizza Hut and Church’s Chicken as well as some supermarkets are accepting tokens such as bitcoin and dash as payment, fueling excitement and filling malls and businesses with logos for well-known cryptocurrencies.
But a major part of Venezuela’s crypto operations involves businesses swapping out of bolivars to beat inflation, said economist and finance expert Aaron Olmos.
