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Venezuela Pitches Oil-backed Cryptocurrency to OPEC

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Venezuela’s president Nicolas Maduro proposed to all OPEC nations to develop a platform which trades oil-backed cryptocurrencies. The petro, Venezuela’s oil- backed cryptocurrency, will soon be in its pre-sale phase. The petro will be used to pay national taxes, fees and public services.

OPEC Nations invited to join

Maduro met with the Secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Mohamed Barkino, and said that he will propose to all nations involved in the organization to form a partnership and develop a platform for trading oil-backed cryptocurrencies.

OPEC is formed out of 14 nations: Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.

“I am going to officially propose to all OPEC and non-OPEC producing countries that we adopt a joint cryptocurrency mechanism backed by oil,” Maduro said.

This proposition comes after Venezuela published the whitepaper for its own oil-backed cryptocurrency. A private pre-sale of the petro will start on February 20, which will then be followed by an initial coin offering.

The petro will allegedly be backed by Venezuela’s oil, gas, gold and diamond reserves.

This new currency is one of the country’s attempts to lessen an economic crisis and food shortages and some say it is a maneuver to circumvent sanctions from the United States.

Venezuela has allocated “5 billion barrels of oil support the petro,” which will be tied to the cost of a barrel of Venezuelan oil. The average price for a barrel in January was $6.40.

”I have explained to Mohammed Barkindo the goodness of the petro. The cryptocurrency is the world of the future. I am very excited as well as the people of Venezuela.”

Petro Whitepaper

” The Bolivarian Republic of Venezuela guarantees that it will accept petros as a form of payment of national taxes, fees, contributions and public services,” read the whitepaper.

The Venezuelan government is committed to promoting the use of petro in the domestic market and making efforts to stimulate its acceptance throughout the world.”

“The State will actively assume the commitment to promote the adoption of petro, encouraging the growth of its national and international user base.”

Around 38.4 million petros from a total supply of 100 million units will be released on February 20th, with discounts given to early contributors to encourage demand.

The petro will be pre-mined, meaning that new tokens cannot be created. The petro can be purchased through online exchanges.

Some exchanges will trade with Venezuela’s local currency, the bolivar, while others will exchange only other digital currencies for the petro, a Venezuelan government adviser told Reuters.

The crypto will be promoted by PDVSA and other public and joint ventures, as well as national public entities and regional and local governments.”  The Superintendency of Cryptocurrencies announced that the “PDVSA will use the petro in its business relations.”

But the United States have warned that purchasing the petro might be in breach of sanctions against Venezuela, which forbid buying newly issued Venezuelan debt.

“The petro digital currency would appear to be an extension of credit to the Venezuelan government … [and] could, therefore, expose US persons to legal risk,” a US Treasury spokesman told Reuters.

While the initiative has good intentions, it remains to be seen what purpose will the petro have and if the OPEC members will back up this cryptocurrency.

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