In light of dwindling dollars due to sanctions, the Venezuelan government has started utilizing the USDT stablecoin to support the exchange market and facilitate imports.
Sanctions Shrink Venezuela’s Dollar Pool
For years, Venezuelan companies have relied on central bank interventions for access to dollars used for imports. However, recent U.S. sanctions have significantly narrowed this channel, forcing businesses to seek alternative means of obtaining currency. The perpetual cash flow of dollars is becoming increasingly constrained.
Incentive to Use Stablecoins
Since June, the government has allowed the sale of USDT to private companies in exchange for bolívars, the local currency. The use of stablecoins has become a practical solution for supporting businesses and facilitating import operations amidst limited access to cash dollars. The volume of such usage is expected to rise as sanctions persist.
From Failed Petro to Entrenched Tether
Venezuela's attempt to launch its own cryptocurrency, the petro, was a failure; however, the government is now leaning on the existing stablecoin USDT. This approach allows for navigating economic hardships and offering businesses more flexible currency mechanisms in times of crisis.
The use of stablecoins can potentially help Venezuela navigate economic challenges; however, questions remain regarding the long-term stability and sustainability of such measures amid international sanctions.
