No one is using or selling Venezuela’s alleged oil-backed cryptocurrency

Venezuela’s oil-backed cryptocurrency is hardly used, and the government has made no move to tap into its oil reserves as promised, a report from Reuters found last week.

The petro can’t be found on any major bitcoin exchange, including Coinbase or Bitfinex, and it isn’t accepted by retailers. Reuters found few buyers through online forums. Transactions of petro are kept anonymous, but their frequency and volume look low when matched up with the government’s claims.

Venezuelan president Nicolás Maduro said that by the end of its initial coin offering on March 20th, petro sales raked in $5 billion, and the funds are paying for imported goods. But a cabinet minister involved in the project told Reuters that the coin’s technology was still in development, and nobody has been able to use the petro. The government agency in charge of the petro, the Superintendence of Cryptoassets, doesn’t have a physical office, and its website is also down.

The petro launched in February, and it was billed as the world’s first sovereign cryptocurrency. It’s built on the Ethereum blockchain and intended to save the country from wild inflation and foreign sanctions. After the petro launched and raised funds through an initial coin offering, the bolívar’s value continued to drop at quintuple-figure rates. Currently, one bolívar is worth 0.000004 USD (down from 0.00004 USD). Each petro was supposedly backed by one barrel of oil, which is worth about $70.

Immediately after the petro was launched, it faced criticism from experts and was regarded with suspicion by US Treasury officials and Venezuela’s opposition party. One of the main concerns was whether oil reserves were really backing up petro, as claimed by the Venezuelan government, and how that would work logistically.

While hard asset-backed tokens are becoming more popular and are seen as a more stable investment than more speculative cryptocurrencies, typically, it is possible to obtain the hard asset. In the case of the petro, however, the oil reserves remain untouched and underground within a small town in Venezuela. The government claims there are 5.3 billion oil reserves in Atapirire, but even so, there are no tools and infrastructure nearby to extract those resources.

On March 19th, US President Donald Trump issued an executive order banning Americans and anyone inside a US territory from purchasing petro, saying it’s “actions taken by the Maduro regime to attempt to circumvent U.S. sanctions.”

Time reported on March 20th that petro was a joint venture between Venezuela and Russia, whose senior advisers recommended the project as a way to dodge US sanctions, adding another wrinkle to an already suspiciously-regarded cryptocurrency.