When the government of Venezuela announced the launch of its Petro cryptocurrency, it claimed that the asset will be backed by the country’s oil reserves. While the asset has been hampered by low adoption, it has begun to pick up pretty well this year. Now, the Maduro administration is rolling out its plans to make it bigger.
On Wednesday, Reuters reported that President Nicolas Maduro, while making a televised address, said that he would be backing the Petro cryptocurrency with 30 million barrels of crude oil.
A few kinks to work out
Although Maduro didn’t provide any details on how these inventories will be commercialized, the 30 million barrels definitely constitutes a significant percentage of the 39 million barrels that the country was said to have had in its reserves at the end of October. The details are undoubtedly murky still, especially as the government initially planned to back Petro with five billion barrels of oil. At the time, many had concerns that this was true, especially given that the possibilities of Venezuela having five billion barrels in its reserves were quite bleak.
In addition to that, there is also the issue of Petro being largely unsanctioned, since it was created initially to help the government evade sanctions imposed on it by the Trump administration. Knowing that Maduro wants to use the asset to back his unsanctioned asset, there is the question of who will purchase it as well.
Petro is gradually taking shape
Distribution and backing challenge aside, Venezuela has done quite a remarkable job with Petro. The asset, which launched to we scrutiny, was hit by skeptics from the day the government announced it. Petro suffered a significant lack of adoption for months on end, but through sheer force of will, Maduro was able to get the asset back on track, and Venezuelans are beginning to transact with it whether they like it or not
Petro has already gotten love from Traki, the largest department store in Venezuela. It is now also being accepted by Banco Venezuela, the country’s largest banking institution. The government has also done its bit to speed up the adoption of the asset. Maduro himself had to order Banco de Venezuela to accept the asset, and in the past two months, it has played a central role in several government initiatives as well.
Last month, the government said it would bankroll the Great Housing Project- its social housing initiative- with the Petro. Also, local news medium Venpress reported on November 17 that the government would be paying Christmas benefits for pensioners and retirees in Petro.
It might not yet be listed on any cryptocurrency exchange, but if Maduro can force his asset to these levels of adoption, the sky really is the limit for the Venezuelan president and his beloved cryptocurrency.
It also goes to show that while Petro might not be getting much (if any) traction outside Venezuela, its adoption in the country- especially over the past six months- is commendable.