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Most people are well aware of how Venezuela wants to create its own cryptocurrency. Known as the Petro, this new form of money is backed by the country’s natural oil reserves. Although president Maduro has planned to issue quite a few of these coins in the near future, that may not happen after all. More specifically, the Venezuelan Congress outlawed the Petro cryptocurrency altogether. In their opinion, this new currency is an “effort to illegally mortgage the country’s oil reserves”.

Venezuela is a country on the verge of collapsing financially. A lot of problems have arisen in recent years and the situation only grows direr. Coming up with a solution to these problems has not been easy. President Maduro has experimented with a few different solutions, but not made any real progress. Instead, he wants to resort to creating a national cryptocurrency, known as the Petro. Backing the value of this currency are Venezuela’s natural oil reserves.

What Will Happen to Venezuela’s Petro?

On paper, this concept makes a lot of sense. It would provide some financial relief for the struggling nation in the coming months and years. Unfortunately, Venezuela’s government isn’t too keen on this idea whatsoever. In fact, they outlawed this cryptocurrency from being created and issued altogether. A remarkable turn of events, although such a move was to be expected at some point. The opposition-run parliament feels President Maduro wants to illegally mortgage the country’s oil reserves. Some very harsh language is being used to make this point even more apparent.

Issuing the $6bn worth of Petro will not happen anytime soon due to this decision. Venezuela needs hard currency and evade financial sanctions at the same time. Without this cryptocurrency, that may become an insurmountable challenge. At the same time, financial experts tear this currency will lead to even more financial mismanagement by the government. The big question is whether or not investors are even interested in the Petro at this stage. Right now, that doesn’t appear to be the case, but things can always change in the future.

For the time being, it remains to be seen how this situation will evolve. It is evident Venezuela’s economy is crumbling as we speak. This situation has gone from bad to worse in quick succession. A national cryptocurrency may very well be the country’s last resort. Unless the Senate reverses its decision, that currency will never exist in an official capacity. This is a very interesting situation well worth keeping an eye on. After all, the Petro may set an international precedent in more ways than one.

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