Could OPEC Adopt a Cryptocurrency? Venezuela Lobbies for Oil-Backed ‘Petro’

The Petro, Maduro’s Venezuelan crypto endeavor, is a pre-mined oil-backed cryptocurrency. However, this isn’t enough for Maduro who now wants an OPEC-backed global cryptocurrency. Could it work and is there support within OPEC?

The President of Venezuela, Nicolas Maduro, wants OPEC support for Venezuela’s new ‘state-backed’ cryptocurrency offering which has been called “the Petro”. This new cryptocurrency is backed by Venezuelan oil supplies and is pre-mined.

He stated:

“I am going to officially propose to all OPEC and non-OPEC producing countries that we adopt a joint cryptocurrency mechanism backed by oil.”

What’s Being Proposed?
Maduro has started informal discussions with OPEC, the Organization of the Petroleum Exporting Countries. The organization is made up of 14 oil producing nations, headquartered in Vienna, Austria, and includes Saudi Arabia, Venezuela, Algeria, Nigeria and Iran as members.

The rudimentary outline of Maduro’s offer seems to support a “joint cryptocurrency mechanism” that would be supported by OPEC nations, with the windfall being distributed throughout OPEC member states. The move is seen, within Venezuelan circles, as a functional way of ending the on-going economic crisis that is ravaging the nation. As hyperinflation continues, the demand for hard currency to alleviate food shortages and social problems grows. As reported previously, Maduro’s representatives have already pitched the ‘petro’ to officials in Qatar, luring the oil-reach Middle Eastern state with discounts to buy into the cryptocurrency.

The “Petro” initial coin offering is a purposeful way for the Venezuelan government to access international cash markets outside of the normal financial systems – currently embargoed courtesy of United States sanctions.

The US Treasury has responded to the circumvention: “The petro digital currency would appear to be an extension of credit to the Venezuelan government … [and] could, therefore, expose US persons to legal risk.”

As a pre-mined cryptocurrency, the “Petro” will have 100 million units released on February 20th. This will be divided between a whole raft of different stakeholders – with 38.4 million being released with serious early investor discounting to help nurture uptake.

Why Is Venezuela Supporting The “Petro”?
The Government hopes diverse exchanges support the “Petro” and the policy is to allow multi-currency exchanges which mean investors won’t be forced to exchange dollars into Bolivars to buy the “Petro” cryptocurrency.

Whether or not OPEC decides to support the scheme is another issue altogether. OPEC, whilst prudently enjoying the proceeds that comes from a global oil price cartel aren’t that united in regard to global economic policy – especially cryptocurrency policymaking.

Nigeria, an OPEC member, stated that Bitcoin was a “gamble”. However, Iraq has started exploring cryptocurrencies because of rampant inflationary pressures on their own domestic fiat-backed currency. There isn’t unanimity in regard to cryptocurrency usage within OPEC member states.

Therefore, Maduro’s posturing might just be that – posturing. OPEC’s diverse membership, who have divergent views on cryptocurrencies within the domain of their own national policymaking, might not support a functional OPEC-backed cryptocurrency on the same grounds.