Venezuela in financial and political turmoil, but approves crypto legislation

Venezuela in financial and political turmoil, but approves crypto legislation

Desperate people are known to do desperate things, but is that maxim also true for countries? Venezuela, a failing socialist state, has two competing presidents at the moment and an inflation rate of 1.7 million percent. Yes, that is correct. It is not a typo. Due to inflation and a host of other reasons, the then current elected president, although the elections are now contested, actually embraced cryptocurrencies back in 2017. It has been an ongoing crypto saga” since then.

Back in late 2017, Nicolás Maduro, the acting president, introduced the “Petro”, a national stable coin to be backed by a combination of oil, gold, diamonds and iron, in a desperate attempt, as many critics have claimed, to create “a “smoke curtain” to cover up hyperinflation.” It would also provide an avenue for getting around sanctions, which had been imposed by the United State. Both Russia and Iran have been in the news for initiating national cryptocurrency projects to achieve ostensibly the same purpose.

Maduro and his government also announced the authorization last fall of six exchanges that would market the Petro to Venezuelan citizens. The National Superintendency of Criptoassets and Related Activities (Sunacrip) was also made the responsible agency for regulating cryptocurrencies and all crypto-related activities. Venezuelans happen to be some of the most crypto-savvy investors, as borne out by trading volumes, but the populace, more than likely distrusting the government, bought Bitcoin instead of Petro.

By way of a very liberal interpretation of the Venezuelan Constitution, Juan Guaidó has asserted that he is now the legitimate president of the country. According to the New York Times, Mr. Guaidó “has declared that President Nicolás Maduro is illegitimate and has asserted himself as Venezuela’s interim president. He has argued that Mr. Maduro’s disputed re-election victory left the presidency technically empty, triggering a rule that allows for Mr. Guaidó, as head of the National Assembly, to be sworn in as interim leader.”

As each presidential hopeful vies for legitimacy and approval from the electorate, as well as from foreign powers, the National Assembly is still responsible for developing legislation, and the national crypto arena was in sore need of defining statutes.

News today is that:

The set of rules for miners, crypto entrepreneurs and regular traders was initially approved by Constituent National Assembly — an alternative to the country’s Parliament, created in 2017 — in November, 2018. The document titled “Constituent Decree on the Integral System of Crypto Assets” contains 63 articles. It gives short definitions of key crypto terms, such as crypto assets, blockchain, mining, cryptography, etc. It introduces the concept of a sovereign crypto asset — any currency issued in Venezuela and authorized by the government.

Sunacrip, the national crypto watchdog established in 2018, was given wide ranging authority to monitor, manage, levy fines, issue licenses, and seize control of assets in the crypto space, if it deemed necessary. According to Criptonoticias, a Spanish-speaking crypto outlet:

This part of the document gives Sunacrip the ability to control any crypto commercial platform in the country, be it local or international, centralized or decentralized.

Nowhere in the 63 Articles of the new rules is there a mention of the “Petro”, although there is a general notation (See above) referring to a “sovereign crypto asset, as it was issued in Venezuela and approved by government”. It is known that Guaidó is not a fan of the Petro, and for the time being and according once again to the New York Times, Juan Guaidó is “the self-proclaimed president of the country, supported by many local and international leaders.”

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