The Venezuelan government’s ambitious project, the petro cryptocurrency, has ended abruptly. The petro, once heralded as a groundbreaking solution to circumvent US financial sanctions, has failed in its mission and fallen victim to a major corruption scandal.
With great expectations, the petro was launched in 2018, touted as a digital currency backed by Venezuela’s abundant oil reserves. However, the initiative was suspended on January 15, signaling the end of a controversial chapter in Venezuela’s economic history. This decision has had little impact on citizens like Isabela, whose elderly parents received meager petro pensions. The impracticality of the currency, which had to be converted to bolivars for any real use, rendered it virtually pointless.
Despite being pegged to the country’s oil prices — $60 per barrel at its inception — the petro failed to garner domestic and international interest. The cryptocurrency market in Venezuela, known for its openness to digital currencies like Bitcoin as hedges against hyperinflation, did not embrace the petro.
The backdrop of this failure is Venezuela’s chronic economic crisis, characterized by the world’s highest inflation rates. The Venezuelan economy, heavily impacted by US sanctions in 2017 and 2019, has struggled with debt, lost its primary oil customer in the US, and has had to resort to alternative currencies like the US dollar, Brazilian real, or Colombian peso in different regions.
The introduction of the petro was part of a broader strategy to enhance Venezuela’s monetary sovereignty and financial independence. However, issuing 100 million petro tokens did little to alleviate the country’s fiscal woes. Trust and utility, crucial for any currency, were conspicuously absent in the case of the petro, partly due to the Venezuelan government’s sanctioned status and lack of transparency.
The lack of clarity surrounding the petro’s operations, coupled with a broader context of cryptocurrency enthusiasm, raised suspicions. Venezuelan authorities had hoped that the petro would appeal to countries excluded from the global financial system, but this aspiration never materialized.
The final nail in the coffin for the petro was a massive corruption scandal in March 2023, involving the embezzlement of $3 billion from PDVSA, Venezuela’s state-owned oil company, and implicating the Superintendence of Cryptocurrencies, Sunacrip. With over $16 billion unaccounted for and a lack of transparent administrative practices, the scandal severely undermined any remaining confidence in the petro, ending its troubled existence as a symbol of failed economic innovation.
