Venezuela State Oil Company Turns to Tether (USDT) Amid U.S. Sanctions

Venezuela’s state oil company PDVSA is increasingly using digital currencies, particularly Tether (USDT), to export crude oil and fuel. This comes after the US reimposed oil sanctions on the country.

according to ReutersThe measure is aimed at reducing the risk that the sale proceeds will be frozen in foreign bank accounts due to sanctions.

Key Point:

  • Since last year, Venezuela’s PDVSA has been gradually shifting oil sales to USDT.
  • The Ministry of Finance has given PDVSA customers and providers a suspension of trading until May 31st.
  • Venezuelan Oil Minister Pedro Telechea has acknowledged that digital currencies may become the preferred payment method for some contracts.
  • The company is increasingly relying on intermediaries for transactions.

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Although the US dollar is the preferred currency for trading in the global oil market, payments in cryptocurrencies are not yet common. However, PDVSA is gradually moving towards a digital currency.

This is particularly in the wake of last year’s corruption scandal involving oil export receivables, which was partially related to previous transactions involving other cryptocurrencies.

Venezuela’s PDVSA migrates to USDT

Under the leadership of Petroleum Minister Pedro Telechea, who took office after the scandal, Venezuela’s oil exports have increased. Production peaked in March at about 900,000 barrels a day, the highest in four years.

PDVSA has switched a number of spot oil transactions without swaps to a contractual mechanism that requires half of the value of each cargo to be prepaid in USDT by the end of the first quarter.

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The transition to cryptocurrencies is not without its challenges. This is because most traders’ compliance departments do not approve his USDT trades as required by his PDVSA. PDVSA also relies on intermediaries to sell its oil, particularly to China, since the US imposed secondary sanctions on Venezuela in 2020.

Vignesh Karunanidhi

Vignesh is an experienced professional in the cryptocurrency field since 2017. He has been writing for over 6 years and specializes in writing and editing different types of crypto content with an emphasis on sharing, such as news articles, long-form articles, and blog posts. The beauty of blockchain and cryptography.

Vignesh Karunanidhi

milk road lighter

Vignesh is an experienced professional in the cryptocurrency field since 2017. He has been writing for over 6 years and specializes in writing and editing different types of crypto content with an emphasis on sharing, such as news articles, long-form articles, and blog posts. The beauty of blockchain and cryptography.

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