The danger of carrying cash and the distrust of government-controlled banks triggered Venezuelan migrants' confidence in Bitcoins and other cryptoassets.
Over the past 25 years, the Venezuelan government has expropriated companies, industries, farmland and other assets. Banks have not been spared from this arbitrary policy, putting the savings of millions of people at risk. If we add to this reality that after Nicolás Maduro came to power in 2013, the existing economic crisis slowly degenerated into hyperinflation, citizens sought urgent solutions to protect their income and savings.
In the mid-2010s, this was a difficult problem to deal with for Venezuelan migrants moving to neighboring countries in search of a better life. “Many Venezuelans had a hard time acquiring dollars to leave the country, either in cash or through banking. Because many do not have accounts abroad. Back then, the existing options were to obtain dollars in cash or obtain them from a government-controlled bank,” explains Venezuelan Mauricio di Bartolomeo, CEO of Ledn, a crypto asset lending startup , to AméricaEconomía .
Di Bartolomeo adds that having dollars in cash was also extremely risky, because migrants could lose them at any border checkpoint, given the corruption of the Venezuelan police. Faced with this latent danger and skepticism towards banking, citizens began to monetize other assets.
For example, some people bought two or three vehicles, updated their price in bolivars, and then sold them to recover their investment. Later, the Venezuelan government noticed these practices, accused those who practiced them of being “hoarders,” and limited the number of vehicles that could be purchased per person. When the same strategy failed with other products due to government intervention, Bitcoin began to position itself as a valuable asset.
“The Venezuelan discovered that if he bought Bitcoins, they retained their purchasing power in dollars and could then be sold to obtain the currency. Thus, Bitcoin mining began to become popular, since electricity in Venezuela is subsidized, which can be used to produce the crypto and sell it at the real price on the open market,” says the CEO of the startup .
In December 2017, the Bolivarian regime responded to these operations by creating its own cryptocurrency: the Petro. “We must move towards new forms of international financing for the economic and social development of the country,” Maduro declared at the time.
Backed by Venezuela's vast reserves of oil, gold and minerals, the government hoped to use the Petro as an international currency. However, the impossibility of mining and US sanctions on its users confined the experiment to the local level. Although again, distrust of Chavismo and the fact that the State was the only provider of the cryptocurrency doomed it to failure. However, the creation of the Petro would also have had darker objectives.
“The real goal of the Petro was to educate corrupt agencies within Maduro’s government to go after Bitcoin miners. Through information campaigns, the regime taught people what a miner was, as well as the type of Internet and electrical charge they used. This served to enable those close to the government to steal the miners’ assets,” says Di Bartolomeo.
The launch of the Petro was followed by the creation of the National Superintendence of Cryptoassets and Related Activities (SUNACRIP) in 2018 with the official purpose of regulating the use of cryptocurrencies in Venezuela. Ledn's founder believes that this institution was created with the aim of compiling a database of all Bitcoin miners in the country in order to take away their assets.
In any case, SUNACRIP generated as much or more skepticism than the Petro and many users tended to ignore its regulations. Until in 2023, the “PDVSA-Cripto” political scandal broke out. It turns out that Venezuelan government officials had embezzled the State of hundreds of millions of dollars through oil operations and digital currencies of the public system. As a result, dozens of alleged perpetrators were arrested and SUNACRIP faced a restructuring process that continues to this day.
Di Bartolomeo points out that while cryptocurrencies lack a “ marketing department that promotes their use, corruption scandals and the unpredictable actions of the Chavista regime are the factors that continue to drive Venezuelans to join the crypto market. It is a trend that would benefit from the arrival of greater US investment, unlikely if Maduro retains power and, therefore, the economic sanctions imposed by the White House.
THE ELECTORAL CRISIS
Regarding the political conflict between Chavismo and the opposition, the Ledn spokesperson believes that while the fraud of July 28 was predictable, the truth is that the use of Bitcoin has gained new momentum with the wave of political persecution of the regime against anyone suspected of dissent. “Now we see that if the government doesn’t like your comments on social networks, they go to your house to put you in jail. If they are capable of something like that, what prevents them from taking everything I have in my bank account,” he questions.
It is not surprising that in this scenario, Ledn works under constant threat. In fact, the recent blockade of Binance, the cryptocurrency exchange platform, still weighs heavily. On the other hand, the verification of registered users is key: Di Bartolomeo says that they must ensure that a person is not in a sanctions regime or is politically exposed before granting them a loan. According to his perspective, this crypto security and Ledn's role as one of the few cryptocurrency lenders in Venezuela and Latin America are the differential value of the startup today.
Now, if the Venezuelan crisis ends with the fall of Maduro and the rise to power of the opposition leader Edmundo González, Di Bartolomeo is blunt about the decisions that the new government should take regarding the crypto market. “I would take a decision similar to the one applied by El Salvador. Perhaps not making Bitcoin legal tender immediately, but I would make it part of Venezuela’s strategic reserves,” he says.
The executive maintains that the country will have to struggle to rebuild an independent banking system supported by the devalued bolivar. Given this scenario, a possible González government should promote an open-door policy to international fintechs so that Venezuelans can access financial services backed by cryptocurrencies and other assets.
Another striking measure supported by Di Bartolomeo is allowing contracts to be paid in Bitcoins, as in Argentina. “This would be part of making Bitcoin legal tender in Venezuela. Basically, what Milei did in Argentina was deregulate all the world's currencies to sign contracts in dollars, cryptocurrencies and even yuan. Something that would also allow invoices to be issued and products to be sold in Bitcoin,” he says.
