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“I do not see this process, which they call “dollarization,” as a bad thing… Thank God it exists.”
– Nicolas Maduro
New York Times newly I mentioned And that Venezuela has become “the first country to manage a significant share of its financial resources in cryptocurrencies.”
But not by choice.
Nearly half of Venezuela’s revenue comes from dollar-denominated oil sales, which Venezuela, as a sanctioned country, cannot legally send or receive.
Previously, sanctioned governments sold their oil for dollars through a network of shell companies and offshore banks — or bartered their oil for goods or infrastructure investments.
Now, they have an easier option: accepting payments in stablecoins. Economist Asdrubal Oliveros Estimates Tether’s USDT stablecoin is the medium of exchange for about 80% of Venezuelan oil sales.
The government once banned dealing in stablecoins, which it viewed as a threat to the bolivar. But the crippling effects of US sanctions left Venezuela no choice but to embrace them.
Delcy Rodriguez, now interim president of Venezuela, realized the inevitability of cryptocurrency-backed dollarization last August, when He said Businessmen say that “unconventional management mechanisms” are being implemented to better manage the bolivar exchange rate.
“The Venezuelan government has since June allowed the use of more USDT,” Reuters I mentioned Shortly thereafter. With state approval, banks now sell USDT earned from oil sales to local companies, which use them to pay local and international suppliers.
They want to trade stablecoins at the retail level as well: the country’s National Supermarkets Association president recently said He said State TV reported that grocery stores were working on implementing systems to accept payment in USDT.
In other words, the Venezuelan government is encouraging the use of dollars issued by Tether instead of the bolivars it issues itself.
As a result, USDT – or “Binance dollars” as many Venezuelans refer to them – now exists user “For everything from groceries and condo fees to salaries and vendor payments.”
So for stablecoin enthusiasts like me, it was disappointing to see that neither cryptocurrencies nor stablecoins deserved a mention in the US government report. Indictment Nicolas Maduro.
Instead, prosecutors described illicit money moving the old-fashioned way: planes returning from Mexico “laden with drug proceeds,” weapons such as grenades and grenade launchers traded for cocaine, protection services paid for with a portion of the cocaine being transported, and a $2.5 million bribe paid in cash in dollars.
Why were cryptocurrencies not mentioned?
There are two possibilities: 1) the US government no longer says anything bad about cryptocurrencies, so prosecutors knew to wisely leave them in, or 2) cryptocurrencies and stablecoins aren’t quite capable of moving money on the scale Maduro and his cronies need to move it.
The former is the more interesting explanation, but the latter is the more likely.
“The state is struggling to liquidate these (crypto) assets quickly, because the transfer of cryptocurrency funds requires passing various controls that are not met,” explains Asdrubal Oliveros.
A a report TRM Labs reached a similar conclusion: “Large-scale trafficking organizations still rely heavily on physical cash, trade-based money laundering, and state or quasi-state protection to move the underlying proceeds, with cryptocurrencies generally playing a secondary or supplemental role rather than replacing these mechanisms.”
National security analysts in Lawfare He agrees: “Cryptocurrency-based sanctions evasion remains only a drop in the bucket compared to traditional illicit financial routes.”
Others are more optimistic about the usefulness of stablecoins and cryptocurrencies in “international payments.”
Crime InsightFor example, Reports That Mexican drug cartels are being “perpetuated” by “an industrial-scale cryptocurrency laundering pipeline that moves dirty money via digital networks to Chinese chemical suppliers.”
As detailed, stablecoins have found a niche of matchmaking between Chinese money brokers who need dollars to sell to clients evading Chinese capital controls and Mexican cartels who need to buy the chemicals they mix into fentanyl from China.
It’s not the product-market fit crypto enthusiasts were hoping for, but the revealed preferences suggest it’s solid. The Drug Enforcement Administration, for example, He says Illicit cash is also being seized sharply less because criminal groups “prioritize cryptocurrencies over traditional cash-based money laundering schemes.”
Seizures of “virtual currency” are correspondingly higher: from 2020 to 2024, the DEA seized $2.5 billion in cryptocurrencies for just $2.2 billion in cash.
This may explain why Maduro and his cronies are sticking to traditional means of payment: traceable cryptocurrencies and lockable stablecoins aren’t quite ready to meet the biggest money laundering needs.
However, Venezuela’s embrace of digital dollars is breaking new ground: “U.S. adversaries have created a working proof of concept.” Lawfare “Emerging financial technologies are likely to further consolidate it,” he concludes.
If so, this could strengthen the dollar as well.
The ban on the use of the dollar did not make Venezuela accept, for example, the yuan for its oil – it made the government use the digital dollar instead.
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