Venezuela Announces Shutdown of Its National Cryptocurrency Petro

Venezuela’s government-mandated cryptocurrency, the Petro (PTR), is scheduled to terminate its operations on January 15. Launched in 2018, the Petro was intended to help Venezuela circumvent U.S. sanctions but ultimately failed to achieve widespread acceptance.

The decision to cease Petro’s operations was disclosed on a government website dedicated to the digital currency, which is currently inaccessible.

Access to the Venezuelan Patria website’s administrative section, previously the exclusive trading platform for the Petro, has been restricted and now requires a password.

Initially, the Petro was introduced as an oil-backed digital currency in response to the severe devaluation of Venezuela’s fiat currency, the bolivar, under the weight of U.S. sanctions. This move was made despite Bitcoin already establishing a notable presence in Venezuela.

However, the Petro struggled to gain traction both domestically and internationally. Venezuelan President Nicolas Maduro mandated its issuance, but the initiative faced resistance from the country’s parliament. Despite reaching full functionality in 2020, the Petro did not achieve significant international adoption.

Efforts to promote the Petro among the ten member states of the Bolivarian Alliance for the Peoples of Our America were unsuccessful. Within Venezuela, the Petro was not legally mandated as tender, and its acceptance remained optional. Even Banco de Venezuela, the country’s largest bank, didn’t accept Petro without a presidential directive.

In a significant development in June 2020, the U.S. Immigration and Customs Enforcement announced a $5 million bounty for Joselit Ramirez Camacho, the head of Venezuela’s National Superintendency of Crypto Assets, the agency overseeing the Petro. Ramirez Camacho was accused of involvement in international narcotics trafficking.

In March 2023, Ramirez Camacho was arrested in Venezuela on charges linked to financial irregularities in the national oil industry. Following his arrest, the agency he led was shut down for reorganization, with its closure later extended until March 2024. This event triggered a broader crackdown that led to the shutdown of various cryptocurrency exchanges and mining operations in Venezuela.

Notably, despite being a government-issued digital currency, the Petro was not a central bank digital currency (CBDC). In 2021, the Central Bank of Venezuela had announced plans to create a CBDC, but these plans never came to fruition, leaving the Petro as Venezuela’s sole attempt at a state-backed digital currency.

The Petro’s journey, from its inception as a means to evade economic sanctions to its eventual shutdown, highlights the challenges and complexities of introducing and maintaining a national cryptocurrency. Its failure to gain traction underscores the difficulties in achieving widespread adoption and acceptance, both domestically and internationally. As of March last year, state authorities ordered a halt to cryptocurrency mining, following an investigation into corruption involving the redirection of payments meant for the state-run oil company, Petróleos de Venezuela, to crypto wallets.