Venezuelans are increasingly interested in cryptocurrency, a new study by blockchain data analytics company Chainalysis showed. The country is currently facing a terrible economic crisis and hyperinflation.
The company's Global Cryptocurrency Adoption Index ranks Venezuela in third place as "the country (which) has achieved one of the highest rates of cryptocurrency use in the world."
See also: Project uses Bitcoin Cash to donate food to the poorest in Venezuela
Adoption of cryptocurrencies continues to grow in Venezuela
Chainalysis published its study on bitcoin usage in Venezuela on Thursday, which is part of its next Cryptocurrency Geography Report 2020.
"Venezuela is going through one of the worst economic crises in modern history, with its national currency, the bolívar, becoming practically worthless," wrote the company. “In these circumstances, cryptocurrency has taken on an important role in Venezuela's economy… As the Venezuelan bolivar lost value in the midst of hyperinflation, Venezuela has become one of the most active countries in the cryptocurrency trade on the planet.”
"The country has achieved one of the highest rates of cryptocurrency use in the world, ranking third in our Global Adoption Crypto Index, as many Venezuelans rely on cryptocurrency to receive remittances from abroad and preserve their economies against hyperinflation."
Most crypto movements in the country are driven by the activity of peer-to-peer (P2P) platforms, specifically Localbitcoins, noted Chainalysis:
“Venezuela is the third most active country on the platform, or the second most active when we scale it by the number of Internet users and per capita purchasing power parity. Venezuela occupies the 3rd place in volume of P2P trade in dollars, after the USA and Russia. ”
Venezuelans are also using Bitcoin.com's P2P platform to buy and sell Bitcoin Cash.
Chainalysis also discussed Venezuela's national cryptocurrency, Petro, launched by "the country's contested government, led by Nicolás Maduro, sanctioned by OFAC and known for its corruption and human rights abuses".
In May, the US placed a $ 15 million reward in Maduro and accused several senior Venezuelan government officials of "narcoterrorism, corruption, drug trafficking and other criminal charges".
The National Superintendence of Crypto and Related Activities (Sunacrip) is the regulator of cryptographic activities in Venezuela. So far, seven cryptocurrency exchanges have been licensed to market Petro.
According to the Maduro government, Petro's adoption has increased significantly. Recently, 305 Venezuelan municipalities have agreed to collect taxes from petro.
One of the approved grants is Criptolago. According to financial intelligence provider Sayari, the exchange belongs to the Venezuelan state of Zulia, with the state governor, Omar Prieto, in a senior management position. "Prieto is a staunch ally of Maduro who is personally subject to US sanctions for refusing to deliver humanitarian aid," said Chainalysis.
Last year, Criptolago addresses received more than $ 380,000 in bitcoins on 3,916 transfers and sent more than $ 360,000 on 2,297 transfers. Although the volume of transfer from the platform has grown more than 13 times in the past year, "it does not appear that Criptolago is helping Venezuelans with more difficulties," Chainalysis said.
The company pointed out that crypto transactions worth $ 1,000 or more represented more than 75% of the total transfer volume, but “the average Venezuelan earns only 72 cents a day, which means that few of them could afford these transfers” .
An expert in Venezuela told the company that "Criptolago's transaction activity suggests that the platform can be used mainly by individuals linked to the Maduro regime who seek to launder funds or withdraw them from Venezuela." However, Chainalysis stated:
"However, we have a lot of anecdotal evidence that people in Venezuela are increasingly interested in cryptocurrencies."
"This fits in our interviews with cryptocurrency experts in Latin America – users not only in Venezuela, but in other countries facing adverse economic conditions, resort to cryptocurrency to preserve their savings in the face of currency devaluation," emphasized the company.