Venezuela is heading through a rough economic patch, with hyperinflation gripping the nation. As a result, many citizens have started to turn to Bitcoin as a way to escape from the failing fiat currency – the bolivar. In an effort to save the country, president Nicolas Maduro created a government-backed cryptocurrency – the Petro – which is allegedly tied to the price of a barrel of Venezuelan oil. On top of this, he then proceeded to tie the nation’s new fiat currency – the sovereign bolivar – to the price of the Petro. However, citizens of the embattled nation continued to buy BTC and DASH instead of the government-backed Petro. In fact, so many people began buying Dash in Venezuela that it has become the cryptocurrency’s second largest market.
Maduro appears to be extremely displeased at this new trend, as such he has begun changing laws to prevent citizens from buying BTC in order to force them to buy the Petro.
Changing Banking Laws
Maduro has amended banking laws and legislations to prevent the country’s citizens from using their local bank accounts to buy BTC and other cryptos. In order to use a bank account from abroad – even to access internet banking – bank customers must notify the bank that they are planning to use banking outside of the country. Banks must report the IP address of any customer trying to use an account overseas to buy BTC – or any other crypt for that matter . This is so that fines and punishments can be bestowed upon the individual once they return to the country.
The Venezuelan government will now force all banking institutions to disclose IP addresses from people who access their banking info from outside the country. Citizens will now have to notify banks before traveling overseas. Users who don’t notify it won’t be able to transact. pic.twitter.com/FAAZ4z80ga
— Eduardo⚡Gómez (@Codiox) August 28, 2018
Following in China’s Footsteps
Venezuela appears to be following in China’s footsteps by banning certain crypto activities. In the past couple of weeks, China imposed a blanket ban on all commercial crypto activities, which led to WeChat closing down the accounts of eight popular crypto accounts. Following WeChat making its move against crypto, Baidu – the Google of China – followed suit and shut a handful of crypto forums and altered its search engine algorithm to de-rank crypto related sites.
Locals Making Last-Ditch Trades
In a last-ditch effort to get their hands on as much BTC as possible before banks implement the new changes, Venezuelans have caused the weekly trade volume on Localbitcoins.com to surge. Data from CoinDance – a site that tracks trade volumes on Localbitcoins.com – shows that in the past two weeks trading volumes have skyrocketed to record levels for the South American country.
Venezuela is in for a tough ride, so life for Venezuela is only going to get harder as the economic crisis deepens. As the failing fiat and unpopular government-backed crypto continue to be excluded from all international exchanges, the economy will only slide further. By banning BTC trading, Maduro has doomed the citizens to use two failing currencies, so there is now more cause for grave concern than ever before.