According to recent information, Venezuela’s government-owned oil company PDVSA is taking steps to boost the adoption of digital currencies and stablecoins such as Tether (USDT) for its crude and fuel sales in response to increasing U.S. sanctions against the country.
PDVSA Mulls Use of Tether USDT
Recently, the US Treasury Department requested that both customers and suppliers of PDVSA (Venezuelan state-owned oil company) stop conducting transactions with them by May 31st. This action will make it harder for Venezuela to increase its oil production and sales since companies must acquire individual US approvals before they can engage in commercial activities with Venezuela once again.
Starting from last year, PDVSA has been moving toward selling its oil using Tether’s US dollar-backed digital currency, USDT, instead of traditional USD transactions. USDT retains a constant value linked to the American dollar, providing a stable monetary anchor. Insiders report that this shift gains momentum due to the renewed oil sanctions, as it helps prevent seized sale earnings in foreign banks, which is a potential risk under these restrictions.
Last week, Venezuelan Oil Minister Pedro Tellechea shared with Reuters his plans to explore digital currencies as an option for certain oil contract payments. He explained, “The specific currency used depends on the contract terms.”
In the international oil trading scene, the US dollar is generally used as the preferred currency for deals, while cryptocurrency transactions are not yet widely adopted but are starting to gain traction in specific regions.
In the previous year, it was revealed that PDVSA was involved in a corruption scandal involving around $21 billion worth of unaccounted-for revenues from oil sales over the past few years. Some of these transactions reportedly included the use of cryptocurrencies.
After the scandal, Tellechea took over as head of Venezuela’s oil ministry. During his tenure, Venezuela’s oil exports have significantly increased. Fueled by American permits authorizing sales, exports reached approximately 900,000 barrels per day in March – a figure not seen since the preceding four years.
PDVSA Demands 50% Payment in USDT
Starting from the first quarter of 2024, PDVSA changed most of its spot oil deals, without involving swaps, into contracts that required PDVSA to pay half of each delivery’s value upfront in USDT.
In addition, PDVSA requires that potential new clients wishing to participate in oil transactions hold cryptocurrency in a digital wallet. This requirement applies to some existing agreements as well, although they do not explicitly mention the use of USDT, a source revealed.
“According to one trader, USDT transactions as requested by PDVSA cannot clear compliance checks, so dealing with an intermediary is necessary for these transactions to go through.”
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2024-04-23 08:11