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As Venezuela’s economic crisis deepens, crypto remittances from family members abroad have surged, providing crucial support for residents grappling with persistent inflation and supply shortages.
In 2023, cryptocurrencies accounted for 9% of the $5.4 billion in remittances sent to Venezuela, totaling $461 million. According to Chainalysis, remittances to Venezuela have increased annually since 2018, with the exception of 2020.
Traditionally, remittances are sent through services like Western Union. However, high fees, long wait times, and currency supply issues often make these services impractical for individuals in developing countries.
Venezuela’s Economic Struggles
Despite possessing the largest proven oil reserves globally, Venezuela’s economy is beset by persistent inflation, severe sanctions, supply issues, and government corruption.
In 2018, the Venezuelan government introduced a state-backed cryptocurrency called the “Petro” to circumvent U.S. sanctions. However, due to perceived corruption and its lack of legal tender status, the Petro failed to gain widespread adoption.
Even Venezuela’s central bank refused to accept the Petro. After six years of limited use, the Petro was discontinued in 2024. Nevertheless, the Venezuelan government continues to explore digital assets to bypass U.S. sanctions.
Earlier this year, reports indicated that the Venezuelan government was considering using cryptocurrencies to facilitate international oil trade. In response, stablecoin issuer Tether announced it would freeze USDT assets held by Venezuela in compliance with U.S. sanctions.
The vast majority of remittances sent to these South American countries are stablecoins and store-of-value assets.
Energy Shortages and Crypto Mining Bans
Despite its economic reliance on oil, Venezuela also suffers from widespread energy shortages. In May 2024, Venezuelan officials announced a ban on crypto mining, claiming that mining placed excessive strain on the country’s power grid, which has been in crisis for the past decade.
Government Stance on Crypto Mining
The May 2024 ban on crypto mining was not the first instance of Venezuelan officials targeting mining operations. In 2023, the government closed several mining facilities amid a corruption investigation into the country’s oil industry and its crypto ministry head, Joselit Ramirez Camacho.
Despite these challenges, the use of cryptocurrencies for remittances continues to grow, providing a vital lifeline for Venezuelans amid the ongoing economic turmoil.
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