Cryptocurrency becomes a key tool in Venezuela's economy, raising sanctions evasion risks

Source: PortaldoBitcoin Original Title: Cryptocurrencies Have Become Essential to Venezuela’s Economy, Study Finds Original Link: https://portaldobitcoin.uol.com.br/criptomoedas-se-tornaram-essenciais-para-a-economia-da-venezuela-diz-estudo/ A new study shows that as the US and its allies increase pressure on the isolated country’s regime change efforts, Venezuela’s reliance on cryptocurrencies continues to grow.

Decades of economic isolation, aggressive international sanctions, and economic collapse have made cryptocurrencies—especially Tether’s USDT stablecoin—a daily necessity for Venezuelans, according to the latest report from TRM Labs.

The report also highlights how Venezuela’s largely unregulated crypto economy could potentially help or may help the country bypass international sanctions.

“Certainly, years of sanctions and the corresponding loss of banking services have driven the country and the overall economy to turn to alternative means,” said Ari Redbord, former U.S. Treasury official and head of TRM’s global policy, in an interview.

Redbord describes the impact of digital assets on the Venezuelan economy as a double-edged sword. He claims that the humanitarian impact of cryptocurrencies on populations without stable financial alternatives should be supported, but the U.S. should also find ways to limit the value of cryptocurrencies in the country “as a tool for sanctions evasion.”

Venezuela’s Informal Trading

The TRM report emphasizes the popularity of peer-to-peer (P2P) cryptocurrency informal trading platforms in Venezuela, which have minimal KYC(Know Your Customer) measures and often operate outside the banking system.

The blockchain intelligence company found that a single website offering peer-to-peer cryptocurrency trading recently accounted for 38% of all network traffic from Venezuelan IP addresses.

Informal P2P cryptocurrency trading, when combined with other variables such as hybrid platforms located between the national banking system and offshore liquidity—and cross-border stablecoin transactions routed through multiple blockchains—tends to be a perfect recipe for sanctions evasion, Redbord said.

Venezuela has a dedicated cryptocurrency regulator, SUNACRIP. However, the agency has faced corruption scandals and restructuring processes, weakening its control over the country’s digital asset economy, TRM states.

It is also one of the earliest countries to adopt blockchain technology. In 2018, Venezuela launched Petro, a token backed by the country’s oil and mineral reserves, aiming to become a more stable national currency than the rapidly collapsing Bolivar.

But after years of controversy, and amid tensions between the Venezuelan president and political opposition, the token was decommissioned in 2024.

In recent months, the White House has significantly escalated tensions with Venezuela, with the president refusing to rule out sending U.S. troops to topple the government this week.

On Wednesday, the U.S. government seized a sanctioned oil tanker off the coast of Venezuela, marking a “serious escalation” in the tense relations between the two countries.