Venezuela’s Petro has proven to be a rather intriguing cryptocurrency. While it is the first of its kind – though not necessarily the last – to be backed by natural oil reserves,the Petrohas not been received all that well. The United Stateswas quick to prohibit the use of this new currency. However, it seems Venezuela is getting a helping hand from a small Russian bank.
It has become more than apparent that theissuance of Venezuela’s Petro cryptocurrency will not go off without a hitch. Despite opposition from various government officials, President Maduro went ahead withit anyway. A good amount of money was raised during the initial sale of the Petro, even though there are still no real use cases for this currency at this time – and there may never be.
To curb the potential impact of the Petro, the US government has made it clearit wants nothing to do with the Petro. Consideringthat this form of money is primarily designed to bypass existing sanctions imposed upon Venezuela by the US,America wants to make sure this new cryptocurrency has no chance of succeeding. That’s understandable, although it may be pretty difficultto stop the Petro from making an impact.
As it happens, a Russian bank is trying to help Venezuela in this regard. Known as Evrofinance Mosnarbank, it is the only international bank defying the US campaign to prevent the Petro from gaining any sort of traction. Thelargest shareholders of this Russian bank are President Maduro’s socialist government, and two state-controlled Russian firms suffering from similar US sanctions. Itis an unofficial alliance between all parties whowish to achieve a similar goalof bypassing the American sanctions.
It also appears the Russian bank has allowedcustomers to buy the Petro with relative ease. Whether or notdoing so is still possible is a bit unclear, as the bank will face a lot of scrutiny over itsconnection with the Petro. President Maduro is convinced the Petro is still alegitimate counterweightto the US dollar, although this will be a steep uphill battle.
It is only normal thatRussia shows an increasing interest in the Petro cryptocurrency. The Eastern European nation has become a sort of pariah in the financial sector. By actively collaborating with China to build the SIPS network and potentially dethroning the US dollar as the one ‘global’ currency, the country is definitely on aunique path. Its relations with both the US and the EUare quickly deteriorating as well, which only further pushesittoward alternative solutions.
This is a veryinteresting situation, and a very tense one at that. Russia and Venezuela are concocting schemes whichcould potentially shift the balance of power in the financial sector pretty quickly.If that were to happen, new challenges and problemswould emerge as well. The Petro is a very intriguing creation,albeit one that will continue to face a lot of opposition for some time to come.