Venezuela Turns to USDT Amid Economic Squeeze: Crypto as a Currency Solution

Venezuela allows the use of dollar-tied cryptocurrencies in currency exchanges for the private sector as U.S. sanctions limit foreign currency availability. The government uses digital currencies like USDT to keep the economy functioning amidst volatile oil revenues and sanctions. Despite the challenges, the use of cryptocurrencies is growing.

Faced with stringent U.S. sanctions and dwindling oil revenues, Venezuela's government is embracing cryptocurrencies to facilitate currency exchanges for the private sector, according to a dozen sources. The United States' sanctions are impacting business transactions by limiting access to foreign currency, as the Venezuelan government terms it an 'economic war.'

Despite the Treasury Department's issuance of a new, restricted license to Chevron, which allows oil exports, the prohibition on payments to the government has slashed dollar reserves available for currency exchanges. Consequently, Venezuela is increasingly relying on cryptocurrencies such as USDT, dollar-pegged tokens designed for stability.

Insiders report that state-run oil company PDVSA is gradually transitioning to digital currency operations, supporting the ongoing functionality of the economy amidst sanctions. Private businesses are also turning to cryptocurrencies for transactions, although no official figures exist, with estimates suggesting significant growth in crypto sales to private sectors.

(With inputs from agencies.)