Venezuela’s much anticipated (yet highly controversial) oil-backed digital coin – the ‘Petro’ token – is coming soon.
On Tuesday, Venezuela President Nicolas Maduro announced that the crypto-crazed country will begin the pre-sale of its new Petro token starting on February 20, in an attempt to alleviate an economy that has been hit hard by inflation and shortages. These tokens will be created on the Ethereum blockchain.
As part of the offering, Venezuela intends to make 100 million Petro tokens available, with each token being backed by one barrel of crude. This means the entire Petro issuance would have a value of $6 billion according to current crude prices.
As stated in the Petro white paper: “Just over half of the funds raised through the sale of Petro will be kept by the government in a ‘Sovereign Fund’, and the rest will be used to fund technological development.”
The introduction of the Petro token and the injection of $6 billion in value could also have a disruptive effect on the entire cryptocurrency industry.
“All the cryptocurrencies of the world have been revalued after Venezuela’s announcements about the creation of the Petro,” suggested Maduro on television.
The potential impact of the Petro tokens has been a hot subject of debate. The U.S. Treasury Department previously issued several warnings directed toward Venezuela’s proposed token issuance, saying that an ICO of this sort would be an infringement of the sanctions the U.S. had imposed against Maduro’s socialist government.
Some skeptics have also questioned the legality of the ICO, arguing that using oil reserves to issue debt could be considered illegal, especially as this is tantamount to an advance payment for the nation’s oil. It is interesting to note that Venezuela currently has the largest oil reserves in the world.
However, Venezuela may not be the only country leveraging cryptocurrency for selling oil. Iran and Russia have also been working out deals for this purpose during the recent weeks.
According to reports, 36 million of the 100 million Petro tokens have been allocated to institutional investors. A delegation from Venezuela is currently in Qatar to discuss how they could invest the Petro.
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