As Venezuela faces knee-deep hyperinflation and the Venezuelan bolívar drops in value steeply, those outside the country have turned to crypto to send funds to their family. The amounts have increased every year minus 2018.
While such remittances traditionally occur through financial services companies specializing in cross-border payments, steep fees, long waiting times, and currency supply issues make it inconvenient for most. So, crypto has become how citizens receive funds from their families abroad.
The country’s standing on the global stage has deteriorated due to its autocratic government, corruption, and unsavory policies, due to which it witnessed a slew of international sanctions. So, despite holding the largest oil reserve in the world, Venezuela faces economic disasters. Its currency observes tremendous devaluation due to hyperinflationary forces.
The Venezuelan government introduced its crypto to overcome sanctions and make transacting and trade easier, especially with the abundance of oil it holds. However, the lack of adoption—for instance, by its own Central Bank—and others caused the government to discontinue its development and maintenance in 2024.
Venezuela has taken other measures, like turning to stablecoins for trade-related purposes. Such efforts are also being met by resistance, as Tether, the largest stablecoin issuer, cut off support to Venezuela this year. That decision came because of the issuer’s compliance with US-related sanctions on the country due to its government.
“Venezuela’s state-run oil company PDVSA plans to increase digital currency usage in its crude and fuel exports as the U.S. reimposes oil sanctions on the country,” a Reuters article from April read.
Nevertheless, peer-to-peer transactions cannot be stopped, which Venezuelan citizens use to receive funds and transact locally for products and services. While the masses may look unfavorably at the government turning to crypto, citizens’ use of the asset type is well-supported, as crypto empowers individuals to access finance despite the conditions bred by their authoritarian government.
Image by Jean Manzano from Pixabay
