Venezuela Moves Oil Sales to Tether (USDT) Amid US Sanctions

Venezuela’s state-run oil company PDVSA is taking steps to increase the use of digital currencies and stablecoins such as Tether (USDT) for crude oil and fuel exports in response to tougher U.S. sanctions against the country, according to a new report. Reinforced.

PDVSA considers using Tether USDT

Last week, the U.S. Treasury Department asked PDVSA customers and suppliers to curtail transactions through May 31st. The measure would make it more difficult for Venezuela to expand oil production and exports, as companies would have to wait for individual U.S. approvals to do so. Trade with Venezuela.

Since last year, PDVSA has been gradually shifting its oil sales to Tether’s own USD-pegged stablecoin USDT. The value of USDT is pegged to the US dollar, ensuring stability. The transition is being accelerated by the return of oil sanctions, sources said, and is aimed at reducing the risk that sanctions could seize sale proceeds in overseas bank accounts.

Venezuelan Oil Minister Pedro Telechea told Reuters last week that the country is considering digital currencies as a preferred payment method for some oil contracts. “According to what is written in the contract, we use different currencies,” he said. Said.

The US dollar remains the main currency for transactions in the global oil market, and payments in cryptocurrencies remain relatively uncommon, although they are emerging in certain countries.

Last year, PDVSA faced a corruption scandal after it was uncovered about $21 billion in unexplained debts from recent oil exports, some of which were linked to past transactions involving various cryptocurrencies.

After the scandal, Telechea took command of the country’s oil ministry. Under Telecare’s leadership, Venezuela’s oil exports soared. Buoyed by U.S. marketing permits, exports soared to about 900,000 barrels per day in March, the highest level in four years.

PDVSA demands 50% payment in USDT

By the end of the first quarter of 2024, PDVSA had transitioned a number of spot oil transactions, excluding swaps, to a contractual framework that required upfront payment in USDT of 50 percent of the value of each shipment.

Additionally, PDVSA requires new customers wishing to participate in oil trading to hold cryptocurrencies in a digital wallet. One source said Venezuela enforced this obligation and applied it to certain existing contracts that do not explicitly specify the use of USDT.

“The USDT trades that PDVSA requires do not go through the trader’s compliance department, so the only way to make it work is to work with an intermediary,” said one trader.

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