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According to a report published by Bloomberg back on January 31st, Venezuelans were moving to the black market to buy dollars because the officially sanctioned government exchange rate rose way above the black market rate. The same report also says that the reason behind what caused the reversal of the long-time dynamic and collapse in the supply of dollars is still uncleared.
Due to the excessive fees of the official exchange, people were forced to pay a premium of 20 times or more than that in the unofficial black market. According to MonitorDolarVz, a the cost of one dollar was 2,500 bolivars in the black market compared with 3,295 bolivars at the government rate.
Venezuelans having bank accounts abroad started to leave the sanctioned financial institutions by the Maduro regime to sell their dollar holdings. They came to know that they can simply make use of their international debit cards in any POS terminal in Venezuela and get a better rate. People have literally started to rely on private exchanges such as Italcambio or Zoom Remesas instead of the officially sanctioned government exchange because the former were offering affordable rate. Another benefit of using this second market was the removal of dubious intermediaries that extracted plenty of money in the form of a premium.
At the beginning of March, the regime set a new system that would allow Venezuela’s citizens to send bolivars to their families (remittances) using cryptocurrencies. However, the thing is that the regime has already imposed commissions on crypto transactions and fund transfers that range from 0.25 euros ($0.28) as the minimum rate per transaction to 15% of the funds transferred in cryptocurrencies.
The Maduro administration has already destroyed their main source of income, Petróleos de Venezuela (PDVSA), the Venezuelan state-owned oil and natural gas company. As a result, the state is running out of the money to finance the various government operations and functionalities. Consequently, the Maduro-led government began seeking to earn a profit from migrants who are trying to send money to their families in the form of crypto.
Some recipient who tried out the system for the sake of curiosity attested the following:
“I sacrificed three dollars worth of bitcoin to test their system, for science (if I had sent any less, the fixed fee they charge would eat up too big a chunk of the money I sent). They asked me for the recipient’s ID number and date of birth and gave me a BTC address to send the money to. I sent the money, and after half an hour, the recipient got a text saying that the remittances were received.”
One crucial aspect of the government website that allows receiving remittances (Patria.org.ve) that is utterly questionable is the fishy fund redeem process: the funds don’t go directly into the account of the recipient but to a one owned by Patria as the receiver merely getting a confirmation of the payment. And it’s not only through the Patria website, but other official channels of sending money don’t work properly compared to the black market.
“We redeemed the money in the Patria webpage, but it’s been a week and the recipient hasn’t received the bolivars. With 3.5% daily inflation, that’s a deal-breaker. Also, the rate isn’t even that good anymore,” stated the Caracas Chronicles.