Venezuela's state-run oil company Petróleos de Venezuela (PDVSA) is looking to accelerate the use of cryptocurrencies in crude and fuel exports amid U.S. sanctions in the country's giant oil sector.
The U.S. Treasury Department said last week that it will reimpose oil-related sanctions on Venezuela, giving PDVSA customers and providers until May 31 to wind down transactions under a general license that has not been renewed over a lack of reforms on the country's election processes.
Under the reimposed sanctions, companies seeking business with the Venezuelan oil industry will need to wait for individual American authorization licenses. Venezuela is also expected to face more difficulty in terms of oil output due to the sanctions.
As part of the efforts to keep the Venezuelan oil sector afloat, PDVSA is planning to increase the use of digital assets in crude and fuel exports, Reuters reported Tuesday, citing people familiar with the plan.
The Treasury's move comes after the arrest of former oil minister Tareck El Aissami, who stepped down from heading the PDVSA last year. El Aissami, who served as President Nicolas Maduro's vice president in 2017, resigned in March amid a corruption scandal that stemmed from oil fund management discrepancies in transactions that the state oil company conducted using digital assets. Despite El Aissami's scandal, the PDVSA continues to look into expanding crypto use in oil sales.
At the end of the first quarter of the year, PDVSA had already moved non-swap spot oil deals to a contract model that required customers to make pre-payments in USDT for half of each cargo's value, as per the report.
The state-run oil company had been gradually adopting U.S.-dollar pegged Tether (USDT) in its oil sales transactions, but with the looming sanctions, the shift toward USDT usage is speeding up, especially due to the risk of sale proceeds getting frozen, the people said.
Tether told the outlet that it honors the Treasury Department's list of sanctioned entities and was "committed to working to ensure sanction addresses are frozen promptly."
The stablecoin giant has frozen funds linked to illicit activities in its cooperative work with U.S. law enforcement. It has also established a growing list of blacklisted digital wallet addresses as a show of its commitment to working alongside authorities to ensure the popular stablecoin isn't used in criminal operations or illicit financing.