Oil in Global Economy Series: Mnuchin warns investors against pouring money into Venezuela’s cryptocurrencies; Maduro advisers call for steep discount

In another setback for the Maduro government, U.S. treasury secretary Steven Mnuchin warned both the U.S. and global investors that pouring money into Venezuela’s proposed cryptocurrency that would be backed by oil reserves could violate sanctions imposed against Maduro and his government.  In a separate event earlier this year, Venezuela’s parliament that is controlled by the opposition has already said that Maduro’s cryptocurrency move is illegal and all the issuances would be made null and void if they come to power.

Earlier this month, Venezuelan President Nicolas Maduro announced that his government will soon issue 100 million Petros - a cryptocurrency, backed by an equivalent number of barrels of oil, partly to get around the U.S. sanctions, which prohibit the purchase of newly issued Venezuelan debt, which has left Maduro unable to refinance the country’s crippling debt burden and led Socialist Party officials to seek new forms of raising hard currency. Maduro has been seeking to capitalize on the success of cryptocurrencies like bitcoin by creating one for Venezuela as its traditional currency, the bolivar, plunges to all-time lows against the dollar and the country struggles with hyperinflation.

Feeling that the statements made by the U.S. Treasury and Venezuelan parliament would dampen the demand for cryptocurrencies from Venezuela even if they are backed by hard assets, official Maduro advisers are reportedly suggesting a steep discount as high as 60 percent.

Reports suggest that despite the parliamentary opposition the cryptocurrencies could go on sale as early as February.