Trump Bans Purchases of Venezuelan Oil-Backed Cryptocurrency

US President Donald Trump has just poured cold water on the hopes of the Venezuelan government to appeal to investors worldwide with the sale of its own cryptocurrency. While the trust in the Venezuelan government is at historic lows and the likelihood of massive investment flows from abroad into the Petro are limited, Mr Trump has today prohibited US citizens to invest in the token sale.

The ICO plans of the Venezuelan government have been mired in mystery as the country announced the issue of its own cryptocurrency with state owned “miners”. The financial resources of the country are put to the brink, forcing the authoritarian leader of the country, Nicolas Maduro to seek alternative ways to raise money.

Desperate Times, Desperate Measures

The Venezuelan government has been under pressure to stabilize the country as record money outflows and falling revenues from oil sales have hampered the economy in recent years. The Venezuelan government has stated that it guarantees that it will receive the Petro as a form of payment for national taxes, fees, contributions and public services.

The problem for the ICO sale is that there is hardly any serious investor in the world that takes the Venezuelan government’s word seriously. Despite the country committing to back the value of the Petro by using the country’s oil reserves, the lack of rule of law is greatly undermining the usability of the Venezuelan cryptocurrency.

Trump’s Ban

US citizens will be barred from purchasing the Petro as President Trump instructed Treasury Secretary Mnuchin to draft the necessary legal measures. The US government has been actively pressuring the authoritarian regime of Nicolas Maduro with many critics advocating harsher measures.

Trump’s Monday order that prohibits US citizens from using the oil-backed currency will greatly complicate Maduro’s plans to raise foreign currency via the cryptocurrency market. Venezuela’s ICO is accepting US dollars and euros, which limits the participation of local residents due to the official limitations on the purchases of foreign currency.

The ban comes as US Treasury Secretary, Mnuchin is meeting G-20 finance ministers in Buenos Aires. Venezuela is said to be one of the hot topics in discussion at the meeting.

Commenting in a statement the US Treasury Secretary said: “President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course to avoid further catastrophe, 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.”