Venezuela central bank considers adding cryptocurrencies to foreign reserves

The Venezuela central bank is strongly considering adding Bitcoin and Ethereum and is in the midst of running internal tests to determine the possibility.

For more than a decade, Venezuela has been isolated from the global financial system following deepening US sanctions. The severe penalties have increasingly pressurized the Maduro government, central bank, state-run companies, and prominent industries to turn to alternate currency reserves.

Desperate times call for desperate measures

In one such attempt, the PDVSA is battling the long-term consequences of these sanctions by proposing the supplier payments through cryptocurrencies. Reportedly, the company has been unable to collaborate with foreign suppliers and investors as most banks restrain from dealing with a Venezuelan company. 

Additionally, the bank employees are also studying the proposals that would help the country tackle its three-decade worse hyperinflation. In an attempt to do so, the central bank is assessing the implications of adding Bitcoin and Ethereum to its international reserves.

Venezuela central bank assesses cryptocurrency potential

Bloomberg reported on Sep 26 that the tests were executed following orders received from Petroleos de Venezuela SA (PDVSA), the publicly-owned oil and natural gas company, which is looking for ways to pay its suppliers using Bitcoin and Ethereum stash collected so far. Although, it is not yet revealed how the company acquired massive Bitcoin holdings.

Moreover, trading the Bitcoin and Ether possessions on cryptocurrency exchanges is a likely gray area given the due diligence requirements and inaccessibility to major trading platform view sanctions. Thus, the firm has now turned to the Central Bank of Venezuela to look into the possibility of cryptocurrency payments.

Meanwhile, the country launched its oil-backed cryptocurrency Petro in an attempt to circumvent the increasing sanctions. To actuate its adoption, President Maduro demanded that the central bank started accepting it and set up Petro desks in all its branches.

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