Venezuela has launched a cryptocurrency backed by oil in an attempt to bypass tough economic sanctions imposed by the U.S. government. "The 'Petro' is intended to bolster the country's crumbling economy, which has been suffering from hyperinflation and devaluation for years," reports the BBC. "Venezuela claims it is the world's first sovereign cryptocurrency." From the report: </s> What Is Petro Cryptocurrency?Petro (PTR) is the latest coin to join the cryptocurrency bandwagon. It's the world's first sovereign cryptocurrency as it will be produced and controlled by the Venezuelan government.Though it was announced in December 2017, it was officially launched on February 20, 2018. "Petro is born and we are going to have a total success for the welfare of Venezuela," said Venezuelan President Nicolás Maduro at the launch. (Source: ". </s> The logo for the petro, as seen at a news conference in Caracas last month. Reuters/Marco Bello
• Pre-sale for the petro, a cryptocurrency issued by the Venezuelan government starts on Tuesday.
• The cryptocurrency, first mooted in December, will be backed by oil, gas, gold and diamond reserves in the economically stricken nation.
• It is effectively being launched to help Venezuela circumvent financial sanctions enforced by the USA and EU.

Venezuela's government will launch the first sale of its commodity-linked cryptocurrency, the petro, on Tuesday.

The cryptocurrency, first mooted in December, will be backed by oil, gas, gold and diamond reserves in the economically stricken Latin American nation.

Tuesday's launch comes in the form of a pre-sale, where potential buyers can sign up to get the petro when it officially launches. The token will attract investment from Turkey, Qatar, the United States and Europe, the country's cryptocurrency regulator, Carlos Vargas, told reporters last week.

Venezuela will issue around 100 million petros, equivalent to around $6 billion.

When the currency was first announced, Venezuela's president, Nicolas Maduro said that it will help Venezuela to "advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade."

The cryptocurrency is effectively being launched to help Venezuela circumvent financial sanctions enforced by the USA and EU against the country as a punishment for its increasingly authoritarian regime.

"The Venezuelan government is looking to take advantage of one of the key features of cryptocurrencies - decentralisation," Matthew Newton, an analyst at trading platform eToro said in an email.

"Through ICOs, cryptocurrencies have shown that start-ups have been able to circumvent traditional finance and fundraising by reaching a global audience through technology and pitching their ideas directly.

"With petro, we are witnessing this opportunism on a much grander scale, and the first of its kind. Other sanctioned nations will be watching closely as petro could set a precedent."

Initially, buyers will be able to use existing cryptocurrencies like bitcoin, as well as fiat currencies like the US dollar, to buy the petro. They will not, however, be able to use Venezuela's currency, the bolivar.

The bolivar is famously weak after hyperinflation in recent years has left it virtually worthless. </s> The Venezuelan government has launched its new cryptocurrency, the petro, as the country struggles amid US sanctions and soaring inflation.

Venezuelan President Nicolas Maduro first announced the controversial digital token late last year as a solution to the country's economic woes, however the US Treasury has warned potential investors that buying the petro could violate sanctions that prohibit the purchase of Venezuelan debt, which could dent investor sentiment.

The petro is backed by Venezuela's vast oil reserves, with Maduro previously saying he would issue 100m tokens backed by 100m barrels of oil, giving the digital coin a market value of about $6bn (£4bn). Today, about 82m tokens were initially made available.

“With the Venezuelan bolivar suffering from hyperinflation and the type of volatility usually reserved for the crypto markets, the petro appears to be an attempt to raise much-needed foreign capital. If it does prove a success, expect other governments to quickly follow suit," said Dennis de Jong, managing director of UFX.

"If petro becomes a valuable coin, it would really open the doors for other countries to use the same format and raise funds," added Naeem Aslam, chief market analyst at Think Markets.

However, petro’s success could bring about another round of regulatory crackdowns on digital currencies.

"In our view, if petro goes ahead and the Venezuelan government manages to raise a considerable amount from investors, this could bring more international scrutiny from regulators," said Matthew Newton, analyst at eToro.

Read more: Venezuela's ironic cryptocurrency distraction: the flaws of the Petro </s> Caracas, Venezuela: Crisis-ridden Venezuela is launching an oil-backed cryptocurrency on Tuesday that it hopes will help circumvent US financial sanctions and resurrect the country's moribund economy.

The pre-sale of the "petro," which will represent a barrel of crude from a specific division in the country's Orinoco oil belt, started on Tuesday morning. Investors were offered US$60 "tokens" at discounted rates that they can exchange for petros during what is being dubbed an "initial coin offering," or ICO, in March.

"The petro is born," President Nicolas Maduro said in a video he tweeted late Monday. "We're going with force, and we'll achieve total success for the benefit of Venezuela and the happiness of our people."

Sceptics have expressed doubts that the currency will thrive, mainly because of lack of trust in a government whose debt is being renegotiated and whose policies have brought skyrocketing inflation. In addition, the country's once-thriving oil company, Petroleos de Venezuela S.A. (PDVSA), is producing at its lowest levels in decades.

Some critics also say the project does not make technical sense because the government will have too much space to manipulate the coin.

But proponents believe buyers may find the currency appealing since it is backed by a commodity and an administration with incentives to see it succeed.

Other cryptocurrencies have experienced considerable instability. The value of bitcoin, for instance, soared more than 300 per cent between August and December 2017, then plunged more than 50 per cent to its current level.

The first cryptocurrency officially launched by a government, the petro aims to offer a more stable option and may serve as an experiment for countries such as Russia. Moscow also faces US financial sanctions, and Russian officials have recently toyed with the idea of creating a "cryptoruble."

But many analysts are dubious that the experiment will succeed.

"It honestly sounds like they don't really understand how any of it works," Alex Van de Sande, a Brazil-based developer for the Ethereum Foundation, said in a phone interview.

"Unfortunately, that doesn't mean it won't raise money. We've seen terrible ideas that don't make any sense raise a lot of it," he said. "If I wanted to avoid international sanctions and make money appear out of thin air in my country hiding the origin, I guess this petro would be a useful way."

Jean Paul Leidenz, an economist at Ecoanalitica, a Venezuelan financial consulting firm, said he sees no chance that the project will inspire enough trust to substitute petros for the crumbling national currency, the bolivar, or even pay impending sovereign and PDVSA debts.

In many ways, it is designed to give the government enough space to manoeuver, he said. For instance, it is not clear whether or how buyers will be able to claim rights over the barrels of oil that back the currency, or whether the coins will work as bonds for which holders will be paid once they want to cash their money out.

"The government may still get millions of fresh dollars from Russian and Arab investors," Leidenz said. "But from that to succeeding as a currency? I don't think so."

Indeed, many issues may erode the petro's credibility. Venezuela's opposition-led National Assembly has called the project illegal, arguing that oil assets cannot, by law, be sold, and that the currency is a form of debt that has to be approved by the legislature. Maduro, however, has ignored the institution for years now.

The US Treasury Department also recently told Reuters that buying petros could be seen as "an extension of credit to the Venezuelan government," which could violate sanctions and expose US citizens to "legal risks."

But Mati Greenspan, senior market analyst at social trading network eToro, said in a phone interview that he thinks the petro does have good prospects.

"It's a milestone - an extremely exciting project that has a great chance of working, and is definitely better than continuing with the status quo," he said.

With confidence in the national currency at rock-bottom, the government hopes that backing a currency with a commodity on an open-source platform will engender trust and transparency, Greenspan said. "If Venezuelans adopt it and see it as a force of good, then the crypto community will be there in a flash," he said.

During the initial coin offering in March, the government plans to sell 82.4 million petros to the public at a discount from the official $US60 value. People will then be able to buy petros from those who obtained them during the ICO.

Under the plan, Venezuelans would eventually be able to use the petro to make payments to public institutions, including tax payments, according to official documents explaining the initiative. No more than 100 million petros will be created unless the "Superintendency for Cryptocurrency" approves making more after counting holders' votes, the documents say. </s> Image copyright Reuters

Venezuela has launched a cryptocurrency in an attempt to bypass tough economic sanctions imposed by the US government.

The "Petro" is intended to bolster the country's crumbling economy, which has been suffering from hyperinflation and devaluation for years.

Venezuela claims it is the world's first sovereign cryptocurrency.

Critics say the move is a desperate attempt by Caracas to raise cash at a time when Venezuela lacks the ability to repay its $150bn of foreign debt.

Opposition leaders said the sale constitutes an illegal issuing of debt, while the US Treasury Department warned it may violate sanctions imposed last year.

The government says the currency aims to circumvent US sanctions on the economy.

President Nicolas Maduro has said each token will be backed by a barrel of Venezuelan crude. The Latin American country has the world's largest proven oil reserves.

A total of 100 million Petros will be sold, with an initial value set at $60, based on the price of a barrel of Venezuelan crude in mid-January.

The official website published a guide to setting up a virtual wallet in which to hold the cryptocurrency, but did not provide a link for actually doing so on Tuesday.

There was also no information on exchanges.

Venezuela's economic crisis has largely been triggered by a slide in oil prices and production, which accounts for 96% of exports. </s> Venezuela Set To Launch The Petro, Its New Cryptocurrency

Venezuela has a severe economic crisis. But rather than a conventional economic overhaul, President Maduro claims that one of the solutions will be a bitcoin-like digital currency. </s> Venezuela Set To Launch The Petro, Its New Cryptocurrency

Venezuela's severe economic crisis has led to food shortages, hyperinflation and a collapse of the traditional currency. But rather than a conventional economic overhaul, President Maduro claims that one of the solutions will be a bitcoin-like digital currency. </s> US President Donald Trump has signed an executive order banning the use of Venezuela's new crypto-currency, Petro.

The executive order, signed by Trump on Monday, prohibits all US transactions in digital currencies that benefit the Venezuelan government.

Trump described the February launch of the Petro cryptocurrency as an "attempt to circumvent US sanctions", according to a White House statement announcing the order.

The order bans US businesses and citizens, specifically "all transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token".

The US government's actions are believed to send a clear message to their counterparts in Venezuela.

Treasury Secretary Steven T Mnuchin said on Monday that the US ban is aimed at "restoring Venezuelan democracy, combating the kleptocracy of the Maduro regime, and responding to the humanitarian crisis caused by Maduro's economic policy".

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The Venezuelan government referred to the US ban as "gross meddling" and tantamount to "new imperial aggression" against its "financial and economic system".

It said it will maintain its "sovereign decision to continue promoting Blockchain technology and make the Petro one of the most solid and reliable cryptocurrencies in the world".

In February, Venezuela became the first country to launch its own digital currency, which critics regarded as a cash levy to pay off Venezuela's foreign debt of $150bn.

Venezuelan President Nicholas Maduro tweeted that the government earned $735m on its launch day - a claim that has not been independently verified.

Currently the Petro is propped up by Venezuela's extensive crude oil reserves.

On Monday, the US also imposed sanctions against four current and former Venezuelan officials on allegations of mismanagement, bribery and corruption.

The sanctions come before Trump's visit to the Summit of the Americas next month in Peru, where the Venezulean crisis is expected to be discussed.

Since November 2017, Venezuela has been in "selective fault" on its foreign debt, foregoing repayment to its bondholders.
Venezuela launches its Petro cryptocurrency, which it claims is the world's first sovereign cryptocurrency.