The oil industry in Venezuela will soon be back under U.S. sanctions after a six-month pause, and the economic impact has reportedly driven the South American nation to accelerate its adoption of cryptocurrency in oil trading.
As part of efforts to encourage Venezuelan leadership to conduct a fair presidential election in July, the U.S. implemented General License 44, which authorized transactions related to oil or gas sector operations in Venezuela. However, after opposition candidate Maria Corina Machado was banned from running by the government of President Nicolás Maduro, the license is being revoked.
Amid the political turmoil, Venezuela’s state-run oil company PDVSA plans to increase the use of digital currencies in its crude and fuel exports. According to sources cited by Reuters, the move is intended to reduce the risk of sale proceeds getting frozen in foreign bank accounts due to the revived sanctions.
Venezuela has been using crypto for years, as President Maduro has himself confirmed. But Reuters reports that PDVSA this year moved many spot oil deals to a contract model that demanded prepayment for half of each cargo’s value in the USDT stablecoin—even during the sanctions’ pause. The return of oil sanctions is simply speeding up this shift.
Additionally, PDVSA is reportedly requiring any new customer conducting oil transactions to hold cryptocurrency in a digital wallet.
The move by PDVSA may be driven more by convenience than strategy, as Tether—the blockchain platform underlying USDT—has a track record record of blocking crypto addresses that are identified by law enforcement agencies as owned by sanctioned individuals. In fact, more bans were enforced just today.
“Tether respects the Office of Foreign Assets Control (OFAC) SDN list and is committed to working to ensure sanction addresses are frozen promptly,” the firm told CryptoSlate.
According to Dune Analytics, Tether has voluntarily blocked 1,426 USDT addresses, freezing over $1 billion in funds.
In early 2018, Venezuela announced its intentions to launch a native cryptocurrency. First proposed to run on the Ethereum blockchain, the token was poised to be censorship resistant and easily tradeable. Months later, the government moved to a private blockchain—which the US later targeted and sanctioned, preventing its global adoption.
The coin died in 2024 after a major corruption scandal ended with the detention of the oil minister and the cryptocurrency superintendent—both of whom are wanted by the U.S. government for corruption charges.
Venezuela’s oil exports increased during the pause. The nation’s oil ministry confirmed that the country exports nearly 1 million daily barrels—the highest in four years.
President Nicolas Maduro remains defiant in the face of the sanctions. “Even with sanctions, blocks, and threats, we will move forward in the country’s development and our people’s peace,” he tweeted yesterday.
The shift towards cryptocurrency in oil trades is a significant move for Venezuela, as it seeks to maintain its oil exports in the face of foreign sanctions. However, relying on middlemen for transactions could mean a portion of oil proceeds end up in PDVSA’s pockets. Venezuela’s most recent corruption scandal involved $21 billion hidden from the government by PDVSA executives using cryptocurrencies.
“[PDVSA executives] had ways to hide the funds in crypto,” Nicolas Maduro said in a TV broadcast. “Something that was created for good was the hideout for mafias, delinquents, and traitors.”
Meanwhile, Venezuelan oil minister Pedro Tellechea said that the country expects to continue signing contracts and crude and gas project expansions during the 45-day wind-down period set by the U.S. and will then ask potential clients to request specific licenses.
Edited by Ryan Ozawa.
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Source: https://decrypt.co/227690/venezuela-turns-to-tether-to-skirt-us-oil-sanctions-report
