Venezuela’s Continued Use of Cryptocurrency Amid US Sanctions

• Venezuela likely to use cryptocurrencies to bypass US sanctions on oil and gold, say dissidents and analysts.
• US reimposed sanctions due to non-compliance by Maduro’s government with pre-election fairness agreements set for July 28.

Venezuela is likely to continue using cryptocurrencies to circumvent a new set of US sanctions focused on the country’s oil and gold activities, according to Venezuelan dissidents and cryptocurrency analysts. 

The Nicolas Maduro administration, despite being embroiled in corruption cases involving cryptocurrencies, appears poised to keep leveraging these digital assets to divert funds away from regulated channels.

In May, the US reimposed sanctions on Venezuela, citing the Maduro government’s failure to honor agreements made with the US to ensure fair conditions for the upcoming presidential elections scheduled for July 28. Analysts indicate that the Venezuelan government will utilize cryptocurrency as a strategic tool against these sanctions, as has been the practice in the past.

Andrew Fierman, Head of National Security Intelligence at Chainalysis, noted that the Maduro regime has historically combined cryptocurrencies with a range of methods to sidestep international sanctions. 

“Regimes under sanctions typically explore a variety of avenues to evade these restrictions,” Fierman explained.

The Venezuelan authorities have recently halted cryptocurrency industry activities, including Bitcoin mining, following a corruption scandal involving over a billion dollars related to cryptocurrency and oil sales. 

Despite these crackdowns and the involvement of the cryptocurrency monitoring agency Sunacrip, its former head Joselit Ramirez, and other high-ranking ministers, cryptocurrency remains a primary tool for evading sanctions.

Previous investigations, by Crypto News Flash and on this occasion by  and on this occasion by Chainalysis revealed that transactions exceeding $70 million in cryptocurrencies were conducted by Sunacrip and its associates to streamline operations. 

PDVSA, the national oil company, is transitioning to having a larger fraction of its dealings settled in USDT, a prominent stablecoin tied to the US dollar, requiring that more than 50% of every oil shipment’s value be compensated in this digital currency, we have reported in more detail previously in CNF.

Despite these developments, Chainalysis has not been able to provide data on the number of cryptocurrency transactions seized related to sanction evasion activities. This ongoing scenario highlights the complex role of cryptocurrencies in global geopolitical strategies and the challenges in regulating these digital transactions amidst international sanctions.