Venezuela is to begin using its controversial petro cryptocurrency as an official accounting unit, which could see the state paying salaries and pensions in petro, rather than fiat currency, for the first time.
The news comes from a televised announcement by the country’s embattled president, Nicolas Maduro, and comes just a matter of months after he first unveiled the cryptocurrency last December.
Tied to Venezuela’s state oil reserves, the cryptocurrency has thus far attracted scorn from the US and international observers, who fear it could ultimately be used to evade economic sanctions.
Petróleos de Venezuela, the state’s oil and gas company, will now use the petro as its mandatory accounting unit, as part of a raft of changes designed to transfer much of the national economy over to the cryptocurrency.
The move coincides with measures from the government to reevaluate its currency the bolivar, amidst widespread economic turmoil in the country. Next week, the government is preparing to create a revalued currency, to be known as the ‘sovereign bolivar’, in an attempt to fix their long-standing economic malaise.
After the reevaluation, the country’s central bank will publish the price of sovereign bolivar relative to petro tokens, and petro tokens relative to other global currencies. At the same time, the state intends to switch to paying salaries and pension payments in petro, becoming one of the first states in the world to send payments of this kind over cryptocurrencies.
The petro has been shrouded in mystery since it was first announced, with some analysts skeptical of claims about the currency made by the Venezuelan government. Opposition politicians in Venezuela have said the cryptocurrency is unconstitutional, while the United States and international allies have been relentless in their condemnation of the move.
US citizens are prohibited from engaging in petro transactions as of March this year, after President Trump announced a new wave of sanctions against the troubled South American country.
Still, the move will be of interest to bitcoin and cryptocurrency observers, as a potential test case for how cryptocurrencies might come to complement or replace fiat currencies in future.