In a widely-anticipated move, President Trump has signed an executive order prohibiting American citizens from buying into the Venezuelan Petro cryptocurrency. This is the first time that a U.S. president has issued any such order relating to a cryptocurrency, though is likely not to be the last.
The order was signed yesterday and prevents Americans from conducting Petro-denominated transactions. All activity in any “digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela” will be “prohibited as of the effective date of this order.”
The Petro has been specifically designed to circumvent the US-led international sanctions on Venezuela and the Maduro-regime in particular. However, without the US market the number of potential purchasers of the oil-backed cryptocurrency is considerably diminished.
President Maduro has responded to the ban, saying that he “energetically rejects and condemns the new unilateral sanction” and claims that this “new imperial aggression” is an attack on “the Venezuelan people and our financial and economic system”. He vowed that the Petro would not be held back by President Trump’s prohibition and that it would, “allow the country to break the ties of the dollar” and create “a prosperous economic and production system” in Venezuela.
U.S. Treasury Secretary Steven Mnuchin is empowered to enforce the order with any necessary new regulations. In a statement he said that Maduro had “decimated the Venezuelan economy” and sparked a “humanitarian crisis”. He identified the Petro as a way for the government to “circumvent sanctions” and pointed out that “Venezuela’s democratically-elected National Assembly” had already rejected the Petro’s launch as illegal.
Earlier this year Mnuchin cautioned that authorities must ensure that cryptocurrencies do not become a modern version of Swiss bank accounts where “bad people” could hide the proceeds from bad actions. On the possibility that the Petro might be used to avoid sanctions he had said that he was “not at all worried”.
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