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Venezuela considers adding Bitcoin and Ethereum to its reser...
03-10-2019 11:35
Venezuela considers adding Bitcoin and Ethereum to its reserves
Venezuela considers adding Bitcoin and Ethereum to its reserves

The American sanctions have left Venezuela no other choice but to renegotiate its payments system. So, the Venezuelan government led by President Nicolas Maduro is considering to replenish its foreign exchange reserves with Bitcoin and Ethereum. The idea was initiated by the country's state-owned oil and natural gas company Petroleos de Venezuela SA (PDVSA), whose specialists had already started working on the implementation of the plan.

Notably, PDVSA has virtually no capacity to handle payments to customers in a traditional way. Therefore, it is currently reviewing all possible options, including the adoption of cryptocurrencies. However, in this case, the company is likely to face a number of difficulties. First of all, it will be forced to get listed on the stock exchange, which requires compliance with certain legal standards. Besides, the management of PDVSA is trying to avoid open-market transactions involving cryptocurrencies. That is why the oil producer is promoting the idea that the central bank pays the company's suppliers on its behalf using cryptocurrencies.

Earlier, the Maduro government launched its own cryptocurrency named El Petro. That was the first state-issued cryptocurrency in the world. However, the project dried up as quickly as it started. All the attempts to adopt the Venezuelan currency failed. The currency was supposed to be backed by the country's oil reserves from the Ayacucho 1 oil field, but the development had not yet commenced. Moreover, the National Assembly of Venezuela stated that such a type of financing violated three provisions of the Venezuelan Constitution.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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