Venezuela To Eventually Sell Oil Only In Petro ERC20 Tokens, Starting March 2019

Colin Muller

Venezuelan president Nicolas Maduro has announced that all of its oil exports will eventually be sold only in Petros (PTR), the country’s state-backed Ethereum-powered cryptocurrency. The announcement was made on state television, after a meeting with Russian president Vladimir Putin last week.

It was subsequently reported by teleSUR (a media outlet backed by several Latin American countries’ governments, including Venezuela’s) that the sale of oil for PTR will begin in March of 2019.

Getting Around Sanctions

The full import of the move, and of the meeting with Putin, was to move away from US dollar-denominated exchange in the hydrocarbon market. “Russia is buying and selling oil and derivatives in [Chinese] yuan [...] We are progressively going to sell all our oil production in Petros,” teleSUR quoted Maduro as saying. Ethereum transactions, of course, cannot be blocked.

The decision to eventually sell only in Petros will be seen as somewhat provocative, because although the United States has applied many sanctions to the Venezuelan economy and key political figures in the past years, it has not done so for oil exports which are by far the most important for the Latin American country. The US has, however, banned US citizens from buying PTR tokens.

In any case, the rhetoric against Venezuela has gone full tilt as of late, with US national security advisor John Bolton (widely understood as one of the principal architects of the US invasion of Iraq in 2003) recently referring to Venezuela as one of the “Troika of Tyranny,” part of a “triangle of terror stretching from Havana to Caracas to Managua.”

It is notable in its own right that almost no English-speaking media outlets have picked up the story - indeed more crypto-news outlets have reported on it than traditional ones.

Venezuela also recently set a fixed price of $150 for one PTR token, each of which are purportedly backed by one barrel worth of crude oil - although this is well above the current going price of nearer $60. In the midst of economic hardship in the country, CryptoGlobe recently reported that Localbitcoins transaction volume in the country was “mooning.”

Outside the Circle of Trust

Venezuela joins Iran in launching a nationally-backed cryptocurrency, in an effort to sidestep international (mostly US-based) sanctions. A political rift between the US and EU recently arose, because of the US pressure applied on the SWIFT money transfer platform to exclude sections of the Iranian economy from transacting using the platform. Russia has also been considering a move in this direction of late.

CryptoGlobe reported on the troubles facing the Petro, including the fact that there sems to be no evidence of its use, and claims that its whitepaper was partially plagiarized.

ErisX Tells Regulator's Why Ethereum Futures Would Create Better Markets

  • Nasdaq and Fidelity Investments-backed ErisX exchange sends explanation letter to CFTC.
  • Letter explains that regulated Ether-based futures contract would create more efficient crypto markets.

ErisX, a US-based digital asset exchange, has filed a comment letter with the US Commodity Futures Trading Commission (CFTC) - after the federal regulator requested more information regarding Ethereum (ETH)’s current market.

Submitted on Friday, February 15, ErisX’s letter asserted:

The introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market.

As covered, ErisX is a newly launched cryptoasset exchange that received $27.5 million in starting capital from multi-trillion dollar investment manager, Fidelity and Nasdaq Ventures, which is Intercontinental Exchange’s (ICE) VC investment division.

Consistent With CFTC's Efforts

In December 2018, ErisX’s management revealed its plans to offer bitcoin (BTC), litecoin (LTC), and ether (ETH) spot trading and it also noted that it was seeking regulatory approval - in order to list cryptocurrency futures at a later point this year. Explaining why such futures contracts would help investors, ErisX’s letter noted that “listing and trading Ether futures compliantly on CFTC regulated markets is consistent” with the financial regulator’s efforts to create “open, transparent, competitive, and financially sound derivative trading markets.”

The letter from ErisX further mentioned that regulated crypto-based futures would “prohibit fraud, manipulation, and abusive practices in connection with derivatives and other products subject to the (Commodity Exchange Act) CEA.” According to the CFTC, bitcoin can be considered a commodity as it has been designed to potentially replace existing fiat currencies (as a medium-of-exchange). Because of bitcoin and ethereum’s decentralized nature, they are arguably not securities, the CFTC has clarified on several occasions.

Explaining the differences between the Ethereum and Bitcoin protocol, ErisX’s letter has stated: 

Ethereum built upon some of the architectural principles of Bitcoin to extend [its] functionality of [a] distributed, (cryptographically) secured, (blockchain-enabled) record-keeping system to include new computational capabilities for the execution of arbitrary code.

"Unregulated Exchanges And Brokers" Trying To "Fill The Gap"

Per ErisX’s analysis of current trends in the global Ethereum (and larger digital asset) market, there is still not a proper regulatory framework in place. This, according to ErisX, has discouraged several large enterprises from entering the fragile crypto ecosystem. At present, ErisX believes there’s a trend emerging in which “unregulated or lightly regulated ‘exchanges’ [and] ‘brokers’ [are trying] to fill the gap, many of them off-shore.” However, ErisX cautioned there may be certain risks associated with this type of market such as increased volatility and liquidity fluctuations.

As noted in ErisX’s letter:

Not unique to Ether, but [current crypto markets could suffer due to] the current fragmented global market structure of trading platforms and ‘exchanges’ with significantly varying degrees of regulatory oversight and operational transparency and integrity.

By introducing standardized, CFTC-regulated Ether-based financial products, ErisX argues the crypto space might receive a more positive response from institutional investors - which could potentially lead to “more robust, liquid, and resilient markets.”