May 25, 2024
Tether Freezes Assets Amid Venezuela's Crypto Oil Strategy
Altcoins News

Tether Freezes Assets Amid Venezuela’s Crypto Oil Strategy

A spokesperson from Tether emphasized the company’s commitment to upholding OFAC regulations, stating, “Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen quickly.” By regulatory guidelines, this statement highlights Tether’s commitment to blocking transactions with sanctioned entities. 

Venezuela’s Cryptocurrency Strategy

Recent reports from Reuters shed light on Venezuela’s strategy to utilize cryptocurrencies, notably USDT, in facilitating its crude oil and fuel exports. With the imposition of new oil sanctions by the United States and the requirement for PDVSA’s customers and providers to wind down transactions by May 31, Venezuela faces heightened challenges in conducting its oil-related transactions.

Source: Wikimedia Commons

According to anonymous sources cited in the report, PDVSA has been turning to USDT as a means to mitigate the risk of funds being frozen in foreign bank accounts. This move comes amidst the backdrop of a corruption scandal in 2023, where cryptocurrency payments were linked to the discovery of unaccounted receivables amounting to $21 billion for oil exports.

Shifting Oil Deals and Cryptocurrency Adoption

The report further reveals that PDVSA has revamped its spot oil deals to a contract model necessitating prepayment in USDT for exported cargo. Additionally, new customers seeking to engage in oil transactions with the Venezuelan state-run oil firm are reportedly required to hold cryptocurrency in a digital wallet.

Implications for International Trade

The utilization of cryptocurrencies, particularly USDT, by sanctioned entities like PDVSA, poses challenges for international trade dynamics. Companies seeking to resume business with PDVSA following regulatory approvals have had to navigate through intermediaries to fulfill the cryptocurrency payment requirements.

Conclusion 

Tether’s pledge to freeze assets associated with sanctioned entities reflects a broader trend of cryptocurrency firms aligning with regulatory standards. Meanwhile, Venezuela’s adoption of cryptocurrencies underscores the evolving landscape where digital assets play a role in circumventing traditional financial barriers.

Image by vecstock on Freepik

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