As the economic situation in Venezuela continues to worsen, crypto remittances from family members living abroad have surged to support residents inside the country suffering from persistent inflation and supply issues.
In 2023, cryptocurrencies accounted for 9% of the $5.4 billion in remittances sent to Venezuela, representing $461 million in value. Remittances to Venezuela have increased every single year since 2018, with the exception of 2020, according to Chainalysis.
Remittances are typically sent using services such as Western Union. However, comparatively steep fees, wait times, and currency supply issues can often make these services, as robust as they are, unviable for individuals in the developing world.
Venezuela's economic nightmare
Despite having the largest proven oil reserves in the world, the Venezuelan economy continues to be plagued by persistent inflation, crushing sanctions, supply issues, and government corruption.
In 2018, the Venezuelan government created a state-backed cryptocurrency called the “Petro” to sidestep United States sanctions against the energy-rich country. Unfortunately, the cryptocurrency failed to gain widespread adoption due to perceived corruption and its lack of status as legal tender inside the country.
Related: Nigeria’s SEC boss says crypto can aid 38M unbanked.
Even Venezuela’s central bank refused to accept the Petro, and after six long years of the currency barely hanging on, it was shut down in 2024. However, this did not stop the Venezuelan government from once again turning to digital assets to sidestep U.S. sanctions.
Earlier this year, reports began to surface that the Venezuelan government was seeking to use cryptocurrencies to facilitate international oil trade. In response, stablecoin issuer Tether announced it would freeze USDT assets held by Venezuela in compliance with U.S. sanctions.
Oddly enough, the country also suffers from widespread energy shortages. In May 2024, Venezuelan officials announced bans on crypto mining, claiming that mining cryptocurrencies placed too much burden on the country’s power grid, which has been in crisis for the past 10 years.
Maduro government hostile to mining?
The May 2024 ban on crypto mining was not the first time Venezuelan officials have targeted mining operations and pursued anti-crypto policies.
In 2023, the country closed mining facilities due to an ongoing corruption probe into Venezuela's oil industry, and the head of its crypto ministry, Joselit Ramirez Camacho.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom.