Venezuelan Petro banned from the USA
US President Donald Trump issued an executive order on March 19th that fully prohibits an American citizen from transactions that involve the Venezuelan cryptocurrency Petro. The order was made effective immediately.
The order states that the decision was taken as it was seen as an attempt by the Maduro government to bypass US Sanctions on the country. The sanctions were imposed on Venezuela to thwart the regime under Nicolas Maduro. He was said to have the constitution rewritten in his favour in 2017 and had dissolved the powers of democratically elected National Assembly in favour of a newly formed Constitutional Assembly. This sanctions also come at a time when there is a growing humanitarian crisis in Venezuela reeling under the effects of hyperinflation and a shortage of food and basic supplies faced by its people.
The Venezuelan cryptocurrency Petro (PETR) was issued by the regime as a token backed by oil, gold and diamonds from the country and raise funds. It was seen as a method to circumvent the US sanctions which barred banks from dealing with the government as well as its subsidiary oil company PDVSA. This had impacted the country’s reserves and in turn dealt a blow to the Venezuelan economy because 95% of the state’s export revenues had come from the sales of the PDVSA alone. The sanctions had also prevented traditional methods of propping up the economy such as raising more debt or the reconstruction of the existing debt structure.
But doubts emerged about the validity of the cryptocurrency which is backed by an extremely volatile commodity as oil. Also, it was issued by a central bank whose reforms had driven the economy to its present woes. So investors and media worldwide thought the guarantee as a farce. It was also dealt a blow by the National Assembly who in a Parliamentary session ruled the issuance of the Petro as illegal.
The effect of the order would mean another blow to the crippled economy from raising the necessary funds. it increases the pressure on Nicolas Maduro to restore the country’s democracy and solve its country’s economic woes.
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