President Donald Trump banned U.S. purchases of a cryptocurrency the Venezuelan government is rolling out, as part of a campaign to pressure the government of President Nicolas Maduro.
Trump issued an order on Monday prohibiting U.S. citizens from engaging in transactions using the oil-backed currency, called the Petro. He authorized Treasury Secretary Steven Mnuchin to issue any necessary regulations to enforce his order.
Maduro created the currency to try to salvage his country’s failing economy, where inflation is estimated to spiral to 13,000 percent this year.
The ban complicates the Maduro government’s efforts to boost its foreign reserves through a digital token. Venezuela’s offering accepted transactions in U.S. dollars and euros, meaning that Venezuelan citizens are forbidden from participating given a ban on buying foreign currency.
“It’s a pretty big blow,” said Russ Dallen, the managing director at Caracas Capital. “Since most cryptocurrencies are not actually backed by anything real, cryptocurrency speculation is based on the greater fool theory — I can buy this at $100 because there is someone who is a bigger idiot who is going to buy it at $200. When you take the U.S. out of that equation, you reduce the interest and potential for that speculation.”
Mnuchin met with other finance ministers on Monday at the G20 conference in Buenos Aires to discuss the situation in Venezuela. His department also announced sanctions on four more current and former Venezuela government officials, according to a statement posted on Treasury’s website.
The sanctioned officials are Willian Antonio Contreras, the vice minister of internal commerce; Nelson Reinaldo Lepaje Salazar, who is acting as head of the office of the national treasury, according to the U.S.; Americo Alex Mata Garcia, an alternate director on the board of the National Bank of Housing and Habitat; and Carlos Alberto Rotondaro Cova, the former president of the board of directors of the Venezuela Institute of Social Security.
“President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course to avoid further catastrophe, the Maduro regime is attempting to circumvent sanctions through the Petro digital currency – a ploy that Venezuela’s democratically-elected National Assembly has denounced and Treasury has cautioned U.S. persons to avoid,” Mnuchin said in a statement.
In his meeting with his international counterparts, Mnuchin said, “we discussed how to achieve our shared objectives of restoring Venezuelan democracy, combating the kleptocracy of the Maduro regime, and responding to the humanitarian crisis caused by Maduro’s economic policy.”
A press official for Venezuela’s Information Ministry declined to comment.
In August, the Trump administration barred the trading of new debt issued by Venezuela’s government and state-owned oil company in U.S. markets amid deteriorating humanitarian conditions in the oil-rich nation. The U.S. government has been weighing sanctions on Venezuela’s all-important oil sector before the nation’s presidential election on May 20. That would be a potentially crippling blow to the Maduro government, which depends almost exclusively on crude sales to sustain what’s left of the economy.
The Treasury Department warned investors in January to steer clear of the digital currency, calling it “another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”
Vice President Mike Pence will pressure Maduro’s government in a speech Wednesday to a session of the Organization of American States, his office said.
“The Vice President will call on all members to increase pressure on the Maduro regime to restore the country’s democracy and address the humanitarian crisis unfolding in Venezuela,” Pence’s spokeswoman, Alyssa Farah, said Monday in a statement.
Trump plans to attend the Summit of the Americas in Lima next month, where his administration is likely to highlight its efforts to isolate the Venezuelan government.