Venezuela to Collect Tax in Cryptocurrency - But No Petro?

Colin Muller

A decree issued yesterday by Nicolas Maduro’s government states that those conducting business in Venezuela involving either cryptocurrency or foreign fiat money must also pay taxes on that business using cryptocurrency or foreign fiat money, respectively.

Specifically, article one of the decree in question - number 3,719, of gazette number 6,420 - states that:

The taxpayers who carry out transactions [...] authorized by the Law [...] in foreign currency or cryptocurrency [...] which constitute taxable events generating national taxes, must determine and pay obligations in foreign currency or cryptocurrencies

Exceptions to this stipulation, according to article two, include an exemption for securities traded on the national stock market, and on the “export of goods and services, carried out by bodies or public entities.”

The plan to accept cryptos is not fleshed-out yet, however, and currently seems to be only an aspiration of this particular issue of the gazette. Article five describes that the country’s agency responsible for regulating banking, the SUBEDAN, will in future “dictate the regulatory norms of the adjustments that must be carried out by the institutions that make up the banking sector for the execution of this decree."

Which Crypto?

Notably, the decree does not mention which particular cryptoasset(s) are usable for paying taxes. There is no mention anywhere in the decree of the country’s national crypto, the Petro (PTR), a ERC-20 token issued on the Ethereum network.

CryptoGlobe recently reported on Venezuela’s stated intention to (eventually) conduct its hydrocarbon trade using only the Petro. This was a noteworthy decision because the US has sanctioned all use of PTR or any trade conducted using it.

Russian Deputy Finance Minister Sergei Storchak recently expressed uncertainty about conducting trade with Venezuela using the Petro, after Maduro traveled to Russia in an effort to foster non-US dollar dominated trade arrangements.

Russia is also subject to US and US-backed sanctions, and is also considering its own implementation of a national cryptocurrency to conduct Eurasian trade.

President Maduro is set to begin his second term of office tomorrow. Latin American politics are increasingly heading to the right, and the regional Lima Group has refused to recognize Maduro’s legitimacy to occupy his office.

Airdrop Venezuela: Raising $1 Million in Crypto for Humanitarian Relief

A new type of humanitarian aid campaign has been announced for the citizens of Venezuela, a South American nation that has been suffering from extreme levels of hyperinflation.

Steve Hanke, the campaign’s manager, told the National Public Radio (NPR) during an interview published on April 21, 2019 that his charitable campaign, called “Airdrop Venezuela,” aims to help send cryptocurrency donations to Venezuela’s residents.

Planning To Raise $1 Million For Venezuelans

As explained by NPR, physical cargo including basic food and medical supplies cannot be easily sent to Venezuela - as the nation’s borders are closely monitored and tightly controlled. Moreover, the Venezuelan Bolivar has become practically worthless due inflation levels exceeding 1 million percent (as of December 2018).

In order to bring some relief to Venezuela’s citizens, Hanke, a professor of applied economics at the prestigious Johns Hopkins University, has recommended that 100,000 “verified” people in the country be given donations in cryptocurrency. Hanke has revealed that, for now, around 60,000 Venezuelan citizens had been verified and approved for receiving monetary assistance.

Approximately $272,000 have been raised in order to help fund the humanitarian aid effort and the goal is to raise a total of $1 million for the initiative. According to Hanke, who previously served as an economic advisor to former Venezuelan president, Rafael Caldera, the $1 million in relief funds will be distributed among 100,000 Venezuelans who meet the requirements to receive assistance.

Hanke believes that the “Airdrop Venezuela” campaign will be able reach its $1 million fundraising target by August of 2019. When asked by NPR to explain how his relief effort will work, Hanke said:

[People anywhere can] donate a cryptocurrency to the campaign, and that cryptocurrency goes to the AirTM platform and [from there, it] is distributed to wallets of the qualified Venezuelans.

Confirming that the wallets can be managed through users’ mobile phones, Hanke acknowledged that there would be certain “challenges” involved when using cryptocurrency to fund the campaign.

Delivering “Hard Currency” To People In Need

Going on to mention what he thinks most people will end up doing, Hanke noted:

[The majority of donation recipients will most likely] go to the AirTM platform and exchange the cryptocurrencies that they've received in their wallet for real money that they can use to buy things.

Hankes added that the “real money would, in most cases, be USD. That’s because the “currency in [Venezuela] is literally melting in your hand.” Because the Bolivar can no longer be practically used for transactions, Hankes believes the solution is “getting people hard currency that they can actually use to purchase something.”

No Political Agenda, Only Looking To Help Those In Need

He continued: “And so that was the general attraction. And the technology of using this Internet platform is just what the doctor ordered.”

In response to a question about whether the charitable project also had a political agenda, Hanke clarified:

No, they're purely humanitarian at this point. And these are private - the private exchanges that are going on. And there's really no particular political motivation. It's just to help people to give them some purchasing power. The money comes from private donations.