Home Letters from Venezuela Bank of Venezuela Will Issue Credits, Payments in State-Backed Cryptocurrency El Petro

Bank of Venezuela Will Issue Credits, Payments in State-Backed Cryptocurrency El Petro

TL;DR: Letters from Venezuela is an exclusive CoinSpice series, an inside look from a reporter on the ground, documenting the South American nation’s last stand among sanctions, political unrest, international condemnation and concern, economic collapse, and the specter of cryptocurrency possibly demonstrating its main use case. In this installment, we examine how the state-owned Bank of Venezuela (not to be confused with its central bank) will issue credits in El Petro, the official national cryptocurrency. They are also designing a system to introduce the petro as a payment currency using the available bank infrastructure.

Bank of Venezuela Will Issue Credits in State-Backed El Petro

While the original proposal of most cryptocurrencies was to sidestep banks, offering a completely independent payment system, these instruments are increasingly being re-evaluated as important banking tools in certain countries under economic sanctions. For example, the Bank of Venezuela will start offering credits in the state-backed crypto petro, using the bank’s already existing infrastructure to issue it as a debt instrument. This was announced by the president of the institution, David Morales, in an interview on the state-owned channel Venezolana de Television.

Petro
Jose Morales, President of the Bank of Venezuela

Morales stated petro credits would have the same requirements of those issued in the national fiat currency, and will be directed to “turn the Petro into a lever for the productive development of the country.” The Bank of Venezuela, along with three other state-owned banks, will start offering these petro-based lines of credits, with other financial institutions soon to follow. The announcement follows Venezuelan President Nicolás Maduro’s recently approving 100,000 petros to public banks to issue in conjunction with loans.

The bank’s head also announced the credit line would be complemented by encouraging petro payments acceptance, using the already existent Bank of Venezuela point-of-sale infrastructure. Morales also insisted his was “the only bank connected with SUNACRIP (National Superintendence For Cryptocurrencies),” stressing they’re “working to include petro-based payment methods and to include it in the BioPago network.” BioPago (translated as BioPayment) is a payment network used only by state-owned banks that use fingerprints associated with users’ bank accounts.

Push for Maduro’s Crypto Project

President Maduro has been very vocal about the importance of the Petro for the future of the country, especially given its current situation. Recently, he also declared his government is eager to “Petro” everything. Bank of Venezuela already has permission to effectively open Petro-associated digital wallets and transfer petro coins to cryptocurrency exchanges, for example.

Petro
BioPago PoS terminal

While there is no doubt Venezuela is making strides in normalizing cryptocurrency adoption, being the first country to offer crypto credits through state banks, many critics of the government state this is just a facade to launder a series of shadow income the Venezuelan government has no way of justifying. Just last month, Bloomberg revealed the government was seeking ways of including an undisclosed amount of bitcoin and ethereum into its international reserve numbers, something no country has even tried to do.

True too there is a fundamental stigma the Petro bears when facing international markets. An Executive Order signed by President Trump forbade US citizens from purchasing or trading petro, a heavy blow for Venezuela-based traders wanting to exchange their currencies for dollars. For that reason and others, the petro is being re-focused as a Venezuelan walled garden currency.

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