“Bitcoin regulation in Venezuela has been an absolute disaster”

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By TP

Key facts: For lawyer Roberto Hung, cryptocurrencies “are illegal phenomena.” There are those who consider that the regulations for the Bitcoin sector in Venezuela are not consistent. For several years, Venezuela has had regulations oriented to the Bitcoin (BTC) ecosystem and cryptocurrencies. Approved by a defunct National Constituent Assembly, this regulation was established as one of the first for the emerging sector in the Latin American region. However, the current state of this regulation is, although in force, ignored. And this is because the main entity that oversees this regulation is currently intervened and, therefore, the Bitcoin sector in Venezuela is partially paralyzed. According to what is established in the Constituent Decree on the Comprehensive System of Cryptoassets, approved in 2018, the use of cryptocurrencies in Venezuela is legal. In addition, Bitcoin mining is authorized from Creole soil. It is a regulatory and structured framework that gives legality to the digital economy.

For all these reasons, Venezuela's cryptocurrency regulation is seen by some as a pioneering regulation. However, in the current conditions of uncertainty, this regulation can easily have three outcomes: its repeal, reformulation or improvementaccording to three specialists in the legislative and legal field consulted by BitcoinDynamic. In essence, These are scenarios that could change the Bitcoin ecosystem in Venezuela. That country is currently mired in regulatory uncertainty and cannot operate with full confidence as it did a few years ago, when it was competing to lead the ranking of nations that most adopt cryptocurrencies. Roberto Hung, a Venezuelan lawyer specializing in digital assets, expressly assures that Bitcoin regulation in Venezuela must be “absolutely repealed.”

In conversation with this media, Hung, who is also a consultant and analyst, pointed out that neither in Venezuela nor in the world The Bitcoin ecosystem needs to be regulatedas he believes that cryptocurrencies “are non-legal phenomena.” That is, they are not governed by legislated regulatory systems.

Roberto Hung supports the repeal of Bitcoin regulations in Venezuela. Source: El Nacional. Hung disagrees with the narrative that cryptocurrency regulation in Venezuela is pioneering. For him, it is an “impostor” discourse. “That is a farce,” he said, explaining that the real intention of regulating the sector in Venezuela “was none other than to have power for power’s sake.”

“Far from being a pioneer, it has been an absolute disaster. Not only because of the entity that it intends to regulate, which is non-existent, but because it did not try at all to understand this phenomenon legally. We have an obsession with wanting to regulate absolutely the entire cryptocurrency ecosystem, and based on legislation, when these systems have their own regulation.” Roberto Hung, Venezuelan lawyer.

Venezuelan regulations must be reformulated

A more nuanced position regarding what should be done with the regulation of cryptocurrencies in Venezuela is that held by Marlon Rojas, a Bitcoin miner and Venezuelan lawyer, who in contact with BitcoinDynamic assured that the regulations “must be reviewed and reformed.”

Rojas, executive director of the mining firm Venecripto Servicios, says that the regulation of Bitcoin in Venezuela “does not represent the true spirit of the ecosystem.” In addition, he believes that this rule was drawn up unilaterally by officials of the intervened Superintendency of Cryptoassets and Related Activities (Sunacrip). Marlon, who has been mining Bitcoin for several years, believes it is appropriate for Venezuelan regulators, policy makers, miners and users to “work together to establish a coherent regulatory framework.” “To build an equitable, inclusive and sustainable cryptoasset ecosystem,” Rojas said. Rojas was emphatic in pointing out that currently regulatory activity by the government “does not exist.” And this is because of the intervention of Sunacrip. For him, it is no small thing. This scenario “leads to inconsistent application and a lack of coherence in the regulatory approach.” Since 2023, Sunacrip has been intervened by the Venezuelan government. That entity participated in the largest government corruption scheme ever executed with cryptocurrencies. This is the Pdvsa-Cripto plot.which cost the loss of about USD 20 billionaccording to government figures. According to the investigations, Joselit Ramírez, president of Sunacrip, and other officials of that entity, participated in the scheme. They are said to have received the dollars from the illegal sale of oil and converted them into bitcoin.

For Marlon Rojas, it is advisable to reformulate the regulation of Bitcoin in Venezuela: Source: Venecripto Services. Marlon Rojas, miner and lawyer, does not believe that the regulations should be redone from scratch to regulate the Bitcoin ecosystem in Venezuela. He claims that this set of rules “is ideal for review, modification and consolidation.” This, “to take advantage of the benefits and manage the risks,” said Rojas. “Its analysis and implementation requires a delicate balance between preventing damage, protecting users and promoting innovation. As well as evaluating recommendations from multilateral organizations,” said the specialist.

It just needs to be improved

For his part, the engineer and director of the National Association of Cryptoassets (Asonacrip), Humberto Quevedo, is in the range of those who consider that the regulation of Bitcoin in Venezuela It can be improved and there is nothing to change.

In conversation with BitcoinDynamic, Quevedo, who also heads the firm CryptoLand VE, noted that the regulations “can be improved” developing “areas of crypto-economy that have not yet been touched.” He sees in this regulation a good legal basis “to work on,” but if there is truly interest on the part of the State in that regard. As you see it, the government needs to define “how and who will regulate the cryptocurrency industry in Venezuela.”

“Right now we don’t know how that will turn out. Whether Sunacrip or its derivative will be placed under the umbrella of the Superintendency of the Banking Sector (Sudeban) and the entire fiat system (something that we don’t see as positive), or whether the autonomy of the system will be maintained and instead work on the coordination and superior control of the institutions to avoid deviations.” Humberto Quevedo, director of Asonacrip.

Quevedo stressed that cryptocurrencies could «contribute to the strategic development of the nation,» especially in the context of the economic sanctions imposed on the Caribbean country. It therefore values ​​the regulatory framework that exists around the emerging sector, since it helps to address this situation.

For Humberto Quevedo, it is feasible to improve the Constituent Decree on Cryptoassets. Source: Courtesy.

Bitcoin doesn't need laws

The views of specialists regarding what should be done with the regulation of Bitcoin in the Caribbean country do not overlook the fact that this monetary system, as well as that of cryptocurrencies in general, has not needed legislation to function and operate in Venezuela.

Experts acknowledge that the cryptocurrency ecosystem is currently more than accentuated in Venezuela. This is already noticeable since the paralysis looms over local operators, such as miners or exchange houses. But users have managed to emancipate themselves and have given rise to the use of international platforms and, of course, the Bitcoin system itself. An example of this is the peer-to-peer cryptocurrency market that is booming in Venezuela. On Binance, the largest cryptoasset exchange in the world, there are thousands of offers to buy and sell digital assets using bolivars as an exchange. These are offers that, in some cases, They involve the trading of tens of thousands of bolivars for BTCether (ETH), USD Tether (USDT) and other cryptoassets.

Binance's P2P market in Venezuela has a significant trading volume. Source: Binance. Something similar can be seen in the Telegram bot lnp2p2bot, through which it is possible to buy and sell bitcoin from person to person, without intermediaries (like Binance) and instantly, thanks to the use of the Bitcoin Lightning network.

In the bot channel it is possible to find thousands of offers to buy and sell BTC for bolivars, with various banks and platforms as payment methods for the trade.

Through lnp2pbot, hundreds of transactions are made with bitcoin and Venezuelan bolivars. Source: Telegram. Thus, it is proven that, although the regulatory limbo in Venezuela remains, there is no situation that prevents the free development of the ecosystem that knows no ties and is protected by decentralization.