Venezuela prepares to issue the ‘Petro’ cryptocurrency; Critics call it an act of desperation

A pre-sale of Venezuela’s new ‘petro’ cryptocurrency will begin on February 20, President Nicolas Maduro says, a move that the government hopes will help pull the country out of a dire economic crisis.

Venezuela rolls out its cryptocurrency, the Petro, on February 20.

Caracas on Wednesday set El Petro’s initial value at $60, but its price will fluctuate based on the oil market, authorities said.

The Latin American country – which has the world’s largest proven oil reserves but is facing a crippling economic crisis – said a pre-sale for 38.4 million “Petro” units out of a total 100 million would take place between February 20 and March 19.

Maduro has previously said that the government will issue 100 million tokens, each valued at – and backed by – the equivalent of one barrel of Venezuelan crude. That would put the value of the entire petro issuance at just over US$ 6 billion.

“All the cryptocurrencies of the world have been revalued after Venezuela’s announcements about the creation of the petro,” said Maduro in a speech broadcast on state television.

The OPEC nation is seeking to raise hard currency amid a crippling crisis.

Venezuela’s government has said that the petro issue will help the cash-strapped country make financial transactions and overcome U.S. sanctions against Maduro’s populist government.

Critics have slammed the move as not only illegal but a simple debt issuance for a government overseeing quadruple-digit inflation and major shortages.

Venezuela is mired in a deep economic crisis triggered mainly by a fall in crude oil prices and a drop in oil production, which accounts for about 96 percent of the country’s exports. It is struggling to restructure its external debt, estimated at around $150 billion by some experts.