Cryptocurrency becomes the lifeblood of Venezuela's economy; research reveals sanctions evasion risks

Source: PortaldoBitcoin Original Title: Cryptocurrencies Have Become Essential to Venezuela’s Economy, Study Finds Original Link:

Background: Venezuela’s Economic Crisis

A new study shows that as the US and its allies increase pressure on this isolated country for regime change, Venezuela’s reliance on cryptocurrencies continues to grow.

Decades of economic isolation, aggressive international sanctions, and economic collapse have made cryptocurrencies—especially Tether’s USDT stablecoin—a daily necessity for Venezuelans, according to the latest report from TRM Labs.

The report also highlights how Venezuela’s largely unregulated crypto economy could help the country evade international sanctions.

“It can be said with certainty that years of sanctions and the resulting loss of banking services have pushed the country and the overall economy toward alternative means,” said Ari Redbord, former US Treasury official and TRM’s global policy head.

Redbord describes the impact of digital assets on Venezuela’s economy as a double-edged sword. He states that the humanitarian impact of cryptocurrencies on populations without stable financial alternatives should be supported, but the US should also find ways to limit the value of cryptocurrencies as a “sanctions evasion tool” in the country.

Venezuela’s Informal Trading

The TRM report emphasizes the popularity of informal peer-to-peer (P2P) cryptocurrency trading platforms in Venezuela, which have minimal KYC(Know Your Customer) measures and often operate outside the banking system.

The blockchain intelligence firm found that a single platform offering peer-to-peer crypto trading recently accounted for 38% of Venezuela IP address network traffic.

Informal P2P crypto trading, when combined with other variables such as hybrid platforms located between the national banking system and offshore liquidity—and high-speed cross-border stablecoin flows routed through multiple blockchains—often becomes a perfect recipe for sanctions evasion, Redbord said.

Venezuela has a specific cryptocurrency regulatory agency, SUNACRIP. However, the agency has been struggling due to corruption scandals and restructuring processes, weakening its control over the country’s digital asset economy, TRM states.

Venezuela’s Blockchain History

The country is also one of the earliest adopters of blockchain technology. In 2018, Venezuela launched Petro, a token backed by the country’s oil and mineral reserves, aiming to become a more stable national currency than the rapidly devaluing Bolivar.

But after years of controversy, Petro became a focal point of tensions between President Nicolás Maduro and political opposition, and the token was discontinued in 2024.

Escalating Geopolitical Tensions

In recent months, the White House has significantly escalated its standoff with Venezuela. US President this week refused to rule out sending US troops to overthrow Maduro’s government.

On Wednesday, the US government seized a sanctioned oil tanker off the coast of Venezuela, marking a “serious escalation” in tensions between the two countries.