Venezuela Launches Pre-Sale of Its Controversial Oil-Backed Cryptocurrency

February 20, 2018, 11:33 AM UTC

Venezuela’s government on Tuesday opened the pre-sale of its contentious petro cryptocurrency, making 82.4 million of the blockade-busting virtual coins available for purchase.

The Bitcoin-esque petro (the code for which is “PTR”) is part of a drive to overcome the U.S.’s economic blockade against Venezuela and rescue the national economy. President Nicolas Maduro announced it back in December, and the U.S. Treasury has warned investors to steer clear of it.

Venezuela’s official currency, the bolívar fuerte, is in freefall. Earlier this month, it saw a 99.6% devaluation—the latest in several under the governments of Maduro and his predecessor, Hugo Chavez.

“Petro is born and we are going to have a total success for the welfare of Venezuela,” Maduro said on Tuesday.

According to a report by the Caracas-based news agency Telesur, people will at first only be able to buy the petro using “hard currencies” and other cryptocurrencies, although it will later be possible to sell petros for local currency.

“Our responsibility is to put (the Petro) in the best hands and then a secondary market will appear,” said Carlos Vargas, who’s charge of the project.

One of the big selling points of cryptocurrencies is—generally—that they are free from the control of any state or central bank. That’s obviously not the case here.

The Venezuelan government has said that each petro coin will be backed by a barrel of the country’s oil. Maduro has also claimed that 100 million petros will be made available at a value of more than $6 billion.

The country’s opposition-led congress has said this is an illegal “forward sale of Venezuelan oil” that is ripe for corruption. If and when Maduro leaves office, the cryptocurrency will be nullified, lawmakers warned.

Some outside observers are also sceptical about the scheme. “Venezuela has been known for misappropriation of assets in the past and the central bank has just created hyperinflation so I imagine there’ll be trust and transparency issues,” Longview Economics director Harry Colvin told CNBC.