Venezuela Accused of Using Tether to Bypass Sanctions

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  • Venezuela’s PDVSA has reportedly expanded its utilization of Tether’s USDT stablecoin to evade sanctions
  • The state-owned oil company, subjected to stringent US sanctions, has shifted its sales through USDT to operate discreetly
  • While digital currency adoption remains limited compared to US dollar transactions, PDVSA’s strategy underscores its potential for circumventing sanctions

Venezuela’s state-owned oil company, PDVSA, reportedly plans to increase its use of Tether’s USDT stablecoin to avoid sanctions. Reuters reports that the company, which has been on the receiving end of tough US sanctions, has been channeling its sales through USDT as a means of conducting business out of the watchful gaze of US authorities. While the use of digital currencies is limited and still dwarfed by US dollar sales, it does highlight once again the potential for them to be used in this manner.

Treasury Sanctions Push PDVSA Towards Crypto

The US Treasury Department recently mandated PDVSA’s customers and providers to conclude transactions by May 31 as punishment for a lack of electoral reforms in the country. This complicated Venezuela’s oil operations, but PDVSA has responded by opening up payment methods, including USDT, in an effort to mitigate the impact of the sanctions. 

Venezuelan Oil Minister Pedro Tellechea revealed to Reuters that some contracts include the option of payment through digital currencies, reflecting a broader trend toward cryptocurrency adoption in global transactions. However, payments in cryptocurrency remain relatively uncommon, with the US dollar remaining the preferred currency.

The biggest fly in the Tether ointment is the necessity of using intermediaries to facilitate payments, a requirement which means that Venezuela enjoys less of the proceeds than it would get through payment in fiat currencies, making it a less attractive option for the bottom line.

Opponents Sharpen Their Scythes

The fact that digital currencies are being used to skirt sanctions in this manner will be catnip to those who see them as holding no purpose other than for illegal activity, and Tether itself won’t exactly be reveling in its name being mentioned in the same breath as sanctions evasion; a recent UN report noted that the company’s USDT coin is the preferred method of payment for criminals in Southeast Asia.

Due to its status as the biggest and most widely accepted stablecoin, the company is often criticized for being the go-to cryptocurrency for illegal activities.