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US president Donald Trump has signed an executive order banning American citizens and residents from buying, trading, or dealing in cryptocurrencies related to the Venezuelan government, specifically the Petro.
Recently launched by Venezuelan president Nicolas Maduro, the controversial Petro was widely seen as a means to evade economic sanctions imposed by the US.
The White House revealed that Trump’s move was “in light of recent actions taken by the Maduro regime to attempt to circumvent US sanctions by issuing a digital currency in a process that Venezuela’s democratically elected National Assembly has denounced as unlawful.”
Details of the order
An excerpt from Trump’s executive order confirmed:
“All 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, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”
However, the move is seen as more symbolic than anything else. For example, it is the first time the US president has been officially linked with cryptocurrency. (President Obama did previously sign an order that enabled authorities to confiscate crypto, but this only referred to “cyber-enabled activities.”)
Even so, the pseudo-anonymous nature of cryptocurrencies mean it would be extremely hard for US authorities to catch anyone illegally trading the Petro on domestic soil. One extreme measure could be to ban the exchanges featuring the Petro.
But while it is no surprise the US has moved to ban the Petro, due to an increasingly rocky relationship with Venezuela, some members of the crypto community are voicing their concerns.
After all, if an executive order can be filed restricting the use of the petro, there’s no reason why a similar decree couldn’t be made against other coins.
The Petro so far
Since its pre-sale launch on 20th February, which reportedly raised $735 Million in its first day, the Petro has continually come up against criticism and controversy.
Backed by massive oil reserves, the Petro was declared a ‘fraud’ and ‘unconstitutional’ by Venezuela’s own Assemblea Nacional [National Assembly]. In a public statement, lawmakers criticised the cryptocurrency’s token sale in general and said it was merely a symptom of the country’s ongoing political crisis.
Rafael Guzmán, president of the body’s finance committee, even went so far as claiming that the Petro was established as a way for the government to embezzle funds.
“This deepens the crisis that we are living in,” he said. “The PTR is another [example] of corruption, and we will come out of this crisis with measures that we have announced from this Parliament.”
Market observers have also fired shots at the Petro for undermining legitimate decentralised cryptocurrencies such as Bitcoin and Ethereum.
“There exists a very real danger that the petro will not only fail to cure Venezuela’s economic woes but will also weaken the integrity of cryptocurrencies writ-large,” said think tank Brookings Institute.