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According to some sources, Venezuela’s Central Bank is conducting tests to check if it can contain cryptocurrencies in its coffers. The news came after Petroleos de Venezuela SA showed interest in using Bitcoin(BTC)trade to make its payments.
Petroleos de Venezuela SA (PDVSA) is a state-run natural oil and gas company. According to some unnamed sources, the company is looking for ways to use Bitcoin and Ethereum (ETH)trade as currencies of payment to the central bank and suppliers. Some proposals are also under consideration that would allow cryptocurrencies to be counted towards international reserves which are almost at a three-decade low.
The reason behind this economic crisis of Venezuela is US sanctions against the country. Many of the country’s officials are resorting to other methods to stabilize the economy. One of these methods is the use of cryptocurrency to move the money.
Even though PDVSA has not disclosed the value of its crypto assets yet, it is a well-known knowledge that the company has been struggling to make payments because of the sanctions. Recently, it had to receive a payment of $700 million in form of the Chinese yuan because no institution was willing to make the transaction.
Cryptocurrency to Help the Failing Venezuelan Government
The use of Bitcoin and Ethereum can help the Maduro government in making transactions and stabilizing the economy with blockchain technology. The use of blockchain technology provides anonymity when it comes to finding out the identity of the person who made the transaction. One of the reasons why banks are hesitant in adopting digital currency is because of this added layer of security. With untraceable transactions, people can use the currency for malicious activities.
PDVSA might not be willing to sell its crypto assets on the open market because that would require the company to officially register with crypto exchanges and be subjected to constant checks. Instead of going to an exchange, it wants the central bank to get involved, since it faces less possibility of being blocked. PDVSA wants the bank to pay the money to entities that it owes money to through cryptocurrency.
Digital currencies are again gaining traction after taking a hit last year. Countries and institutions are becoming more accepting of blockchain technology. Governments are willing to introduce policies that cater specially to cryptocurrencies and their users. Even though the currency is still volatile, its overall value has increased by 130%.