Will Venezuela be able to solve part of its economic problems by introducing this new cryptocurrency, the petro?
Not all that much. It will not completely solve Venezula’s financial problems caused by EU and US sanctions. Rather ,it will only cause distractions from them . It will be difficult for Venezula to control its crypto currency just like its flat currency. It is not clear about petro’s operational viability; how holders of petro will be able to convert it. Under Decree 3196 of December 8, 2017 the government of Venezuela was authorized to create its own cryptocurrency, the petro, which would be physically backed by Venezuelan barrels of oil. One petro would be backed by a purchase-sale contract for one barrel of Venezuelan oil as quoted in the OPEC Reference Basket, as well as other commodities, including oil, gold, diamond, and gas reserves.
Decree 3196 mainly provides for the operational details of the petro, including its issuance, mining, and trading in Venezuela according to the rules on purchase and sale contained in the Civil Code.6 According to a legal expert on information technology law, all cryptocurrencies are considered a financial asset subject to the rules applicable to such assets under Decree 3196 and none of its provisions declare them illegal. The Decree196 states that the holder of petro will be able to exchange the market value of the crypto asset for the equivalent in another cryptocurrency or in bolívares (the traditional currency of Venezuela) at the market exchange rate published by a national crypto asset exchange house. The holder of each petro would also own a virtual wallet, which was to be his/her own responsibility, along with the risks related to its custody and management
According to Decree 3196, an initial coin offering will be made through auction or direct assignment by the Superintendence of Cryptoassets and Related Venezuelan Activities.
On March 8, the (National Assembly, the Venezuelan Congress), declared that the issuance of a domestic cryptocurrency such as the petro is illegal because in order to enter into a public debt and borrow on behalf of the Venezuelan government, congressional approval and a special law are required under the National Constitution In addition, only the Central Bank of Venezuela may issue national currency. It is not possible for a local government to regulate cryptocurrency. It should also be further stated that oil reserves are public national assets that belong to the Republic and are non-transferrable assets, and therefore cannot be used as a guarantee for any debt
Despite these declarations , the Government has said the petro will become legal tender for all transactions involving government institutions within 120 days of April 9, 2018. In a small number of jurisdictions, surveyed cryptocurrencies are accepted as a means of payment. As Finland does not have specific regulations that deal with cryptocurrencies and blockchain technology; it is not able to carry on with its research team. The current prices ($62 a barrel) 100 million Petros could help raise around $6bn