U.S. Senators: Venezuelan Cryptocurrency Could be Copied by Russia, North Korea

Two U.S. senators have denounced Venezuela’s planned cryptocurrency in a letter addressed to the U.S. Treasury Secretary Steven Mnuchin, Eth News reports.

In an open letter, U.S. Senators Marco Rubio and Robert Menendez demanded to know what the U.S. government was doing to foil attempts by rogue nations in leveraging cryptocurrencies to skirt imposed sanctions. In particular, the two senators are targeting the failed state of Venezuela.

Last month, Venezuelan president Nicolas Maduro announced that the country is creating a cryptocurrency that will be backed by Venezuelan reserves of gold, oil, gas, and diamonds. According to Maduro, the cryptocurrency called “petro,” will help combat the U.S.’ “blockade” against the country. It will enable Venezuela to advance in monetary sovereignty and carry out its financial transactions to overcome the financial blockade.

The two senators are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the US, actions that would clearly thwart the intent of U.S. imposed sanctions. The senators are also concerned that North Korea and Russia will be watching with interest, looking for an opportunity to copy Maduro’s plans.

“We have serious doubts about whether Venezuela has the capacity to launch a cryptocurrency, but regardless, it is imperative that the U.S. Treasury Department is equipped with tools and enforcement mechanisms to combat the use of cryptocurrency to evade US sanctions in general, and in this case in particular,” the two senators stated.

Even Venezuela’s own national congress has denounced the proposed cryptocurrency as illegal. The Venezuelan parliament claimed that any issue of the cryptocurrency would violate constitutional requirements that mandate the legislature approve any borrowing against Venezuela’s oil wealth. The parliament called the petro an effort to illegally mortgage the country’s oil reserves.