Venezuela’s state-run oil company, PDVSA, is ramping up its use of digital currencies, particularly Tether (USDT), for crude and fuel exports. This comes after the United States reimposed oil sanctions on the country.
According to Reuters, the move is aimed at reducing the risk of sale proceeds being frozen in foreign bank accounts due to the sanctions.
Key points:
- Since last year, Venezuela’s PDVSA has gradually moved oil sales to USDT.
- The Treasury Department has given PDVSA’s customers and providers until May 31 to wind down transactions.
- Venezuelan oil minister Pedro Tellechea confirmed that digital currencies might be the preferred payment method in some contracts.
- The company is increasingly relying on middlemen for transactions.
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The U.S. dollar is the preferred currency for transactions in the global oil market, and payments in cryptocurrency are still uncommon. However, PDVSA has been slowly moving towards digital currencies.
This is particularly after a corruption scandal last year involving unaccounted receivables for oil exports, partially related to prior transactions involving other cryptocurrencies.
Venezuela’s PDVSA shifts to USDT
Under the leadership of oil minister Pedro Tellechea, who took over following the scandal, Venezuela’s oil exports have increased. It peaked in March at about 900,000 barrels per day, the most in the previous four years.
PDVSA switched numerous spot oil transactions without swaps to a contract mechanism that required prepayment for half of each cargo’s worth in USDT by the end of the first quarter.
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The shift towards cryptocurrencies has not been without challenges. This is because most traders’ compliance departments do not approve USDT transactions as demanded by PDVSA. PDVSA has also relied on middlemen for its own oil sales, especially to China, since the U.S. imposed secondary sanctions on Venezuela in 2020.
This news is republished from another source.
