Cryptocurrency Regulation in Venezuela Prior to 2024

Venezuela’s journey into the realm of digital currencies represents a significant chapter in the global finance and regulatory landscape. This journey is characterized by innovative approaches, legal challenges, and government initiatives.

The Petro Cryptocurrency

The Venezuelan government introduced the Petro, a state-backed cryptocurrency, in December 2017 under Presidential Decree 3196. Conceived amid economic instability and hyperinflation, the Petro was designed as a digital asset backed by the nation’s oil and mineral reserves. It aimed to circumvent economic sanctions, bolster the national economy, and provide a more stable alternative to the Venezuelan bolivar. However, the Petro faced immediate legal challenges, with the Asamblea Nacional declaring it unconstitutional in March 2018. Despite these challenges, President Nicolas Maduro maintained its legal tender status, leading to its limited acceptance and utilization both nationally and internationally​​.

Legal Framework for Cryptocurrencies

Venezuela’s entry into the cryptocurrency domain was marked by the enactment of Decree 3196, which laid the foundation for the legal regulation of mining, use, exchange, and other activities related to crypto assets. This decree recognized cryptocurrencies as legal and set forth the parameters for the licensure and operation of crypto exchanges. The Constituent Decree on Crypto Assets further solidified Venezuela’s commitment to integrating cryptocurrencies into its economic system. This comprehensive legislation included detailed provisions on the issuance, organization, and operation of digital assets, along with stringent regulatory requirements for the crypto ecosystem​​.

SUNACRIP: Regulatory Authority

The National Superintendence of Crypto Assets and Related Activities (SUNACRIP) played a pivotal role in regulating the creation, issuance, organization, operation, and use of crypto assets. SUNACRIP’s responsibilities included issuing licenses, monitoring crypto-related activities, and imposing sanctions for non-compliance. The institution also nurtured innovation within the crypto space, balancing regulatory oversight with the encouragement of digital asset growth and development​​.

Petro: A Unique CBDC

Petro, as a central bank digital currency (CBDC), occupied a unique position in the global financial ecosystem. Unlike conventional CBDCs, Petro was backed by tangible assets, including oil, diamonds, and gold, and was conceived to circumvent international sanctions. This backing was intended to provide stability and trust in the digital currency and counteract the hyperinflation affecting the Venezuelan bolivar. However, Petro faced international rejection, legal hurdles, and technological and adoption barriers, leading to debates over its effectiveness as a stabilizing financial instrument​​.

Regulation of Bitcoin Mining

In 2020, Venezuela transformed its approach to Bitcoin mining from a legally ambiguous activity to one recognized and regulated by the government. The legalization of Bitcoin mining aimed to harness its economic potential while curbing illegal activities. The establishment of the National Mining Pool (NMP) centralized mining efforts, mandating participation for transparency and compliance with legal standards. However, this centralization sparked concerns about governmental control and potential censorship, highlighting the need for a balanced regulatory approach​​.

Venezuela’s approach to cryptocurrency regulation prior to 2024 demonstrated a complex interplay of innovation, legal hurdles, and government initiatives. The nation’s efforts to integrate digital currencies, particularly the Petro, into its economic framework, faced challenges yet marked a significant step in the broader context of global digital currency adoption and regulation.