CARACAS (Reuters) – Venezuela’s “petro” cryptocurrency will initially be offered in a pre-sale in hard currency and other cryptocurrencies, the government said on Tuesday, and not initially available in the country’s collapsing bolivar currency.

Venezuela’s President Nicolas Maduro attends a military parade for the transmission of National Guard command in Caracas, Venezuela January 16, 2018. Miraflores Palace/Handout via REUTERS

Leftist President Nicolas Maduro is hoping to capitalize on the success of cryptocurrencies by creating one for Venezuela as the bolivar plunges to all-time lows and the country struggles with hyperinflation.

In his surprise announcement late last year, he said the petro would be backed by Venezuelan crude reserves, the world’s largest, although the political opposition says this would be illegal.

Critics decry the petro as simply a way for the cash-strapped government to issue debt without being constricted by U.S. sanctions. But the U.S. Treasury last week warned that Americans engaging with the petro could still find themselves in violation of those sanctions.

“The presale and initial offer will be made in hard currencies and in cryptocurrencies. It is not going to be done in bolivars at this stage,” said Carlos Vargas, the government’s cryptocurrency superintendent, in a state television interview.

“Our responsibility is to put (the petro) in the best hands and then a secondary market will appear,” he said, adding that after the initial sale, the petro could be sold in exchange for local currency.

The value of the entire petro issuance of 100 million tokens would be just over $6 billion, according to details given by Maduro in recent weeks.

A draft document on the petro, created by advisers to the government and reviewed by Reuters last week, said Venezuela should sell 38.4 million petros with a face value of around $2.3 billion in private placements starting on Feb. 15, at a discount of up to 60 percent.

Another 44 million petros with a face value of $2.7 billion should be offered to the public a month later, it read.

The Venezuelan government said last week that information reported in news outlets based upon the document was “false.”

Vargas also said on Tuesday that those mining traditional cryptocurrencies in Venezuela were doing nothing illegal, despite some having been detained for doing so in recent years.

Mining uses algorithms to solve complex problems in order to validate cryptocurrency transactions, rewarding the miner with a small unit of the cryptocurrency.

“It is an activity that is now perfectly legal,” Vargas said. “We have had meetings with the Supreme Court so that people who have been victims of seizures and arrests in previous years will have charges dismissed.”

Many in Venezuela have used cryptocurrencies in recent years to evade strict currency controls.

Reporting by Corina Pons and Girish Gupta, Editing by Rosalba O’Brien


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