Venezuela’s state-run oil company, Petróleos de Venezuela, S.A (PDVSA), is looking to increase its digital asset usage as the US government has reimposed sanctions on the Venezuelan oil industry. PDVSA had previously discussed such a move, but the re-imposition of sanctions is likely to accelerate their need to do so as it will certainly affect their crude oil and fuel exports.
PDVSA’s customers and providers were given until May 31, 2024, to wind down transactions, as directed by the US Treasury Department. The directive is in response to a lack of electoral reforms in the wake of Venezuela’s fall 2023 election.
The sanctions will make it more difficult for Venezuela to increase oil output and exports as companies looking to do business with them will have to wait for individual US authorizations to do so. This is why the PDVSA is looking to digital assets such as USDT (Tether), or potentially other stablecoins, in order to keep their economy moving.
A Tether spokesperson has already stated that, “Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen promptly.” So, it may be difficult for the PDVSA to use USDT as its digital asset of choice to get around US sanctions.
US Sanctions Pushing Nations to Crypto?
Venezuela isn’t the only country that is looking more closely at digital assets thanks to US sanctions. Russian president Vladimir Putin has already stated that cryptocurrency has a place as a trade asset, though not necessarily for trading for oil. But US sanctions on Russia oil trade haven’t really affected the nation, as they’ve doubled their revenue from last year despite sanctions being in place since Russia invaded Ukraine in 2022.
Russia has been able to improve their revenues while being at war because they have been able to sell their oil to allies at discounted prices. This includes nations like India, China, and Saudi Arabia, all of whom have benefited from being able to buy oil at a discounted rate from Russia. The fact that the Russian oil industry has essentially been unaffected by sanctions is a bad sign for geopolitical stability.
The USD as a reserve currency is something that the US tries to leverage politically, which is a mistake according to Putin.
“I believe the U.S. makes a huge mistake in using the dollar as a sanction instrument. We are forced. We have no other choice but to move to transactions in other currencies. In this regard, we can say the United States bites the hand that feeds it. This dollar is a competitive advantage. It is a universal reserve currency, and the United States today uses it to pursue political goals, and they harm their strategic and economic interests as a result.”
Whether this is true or not will only be clear over time, as the US continues to try to rein in inflation even in the wake of another US regional bank collapse.
Closing Thoughts
Cryptocurrency has always had an objective of disrupting current global systems, including the USD as a global reserve currency, and the US as a global power that affects the ability of many other nations to grow.
US sanctions on other nations’ trading could and likely already have accelerated said nations’ willingness to accept cryptocurrencies or consider them as alternative methods of payment.
How decisions like the PDVSA one will affect the global digital asset sector is yet to be seen, but it seems likely they won’t be the last company or state to start looking towards digital assets as accepted currencies. Such a move could be a catalyst in pushing crypto adoption into the mainstream.
