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News > World

US Lawmakers Predictably Take Aim at Petro as Iran, Russia Consider Following Venezuela's Lead

  • U.S. Republican Senator Marco Rubio.

    U.S. Republican Senator Marco Rubio. | Photo: Reuters

Published 24 February 2018

Russia and Iran have expressed interest in developing their own digital currencies to help combat U.S.-imposed sanctions.

Democratic United States Senator Bob Menendez and his Republican counterpart, Marco Rubio, have co-authored a letter denouncing Venezuela's newly-launched cryptocurrency, the Petro, and requesting that the Treasury Department closely monitor its progress. The lawmakers also made suggestions on the measures the agency can take to undermine the success of the digital currency, which has raised over US $1 billion for the South American country since it was launched on Tuesday.

Iran, Russia Consider Developing Own Cryptocurrencies

During a hearing convened by the Senate Committee on Banking, Housing and Urban Affairs earlier this month, Menendez also made his intention to subvert the Petro in any way he can clear. Jay Clayton, Securities and Exchange Commission chairman, and Christopher Giancarlo, Commodity Future Trading Commission chairman, declined to respond whether their agencies could undercut the Petro, Giancarlo assured that his “would certainly look at” the cryptocurrency to guarantee that it doesn't swindle U.S. buyers.

Meanwhile, the U.S. Treasury Department had issued a statement on Petro in January. It read that “a currency with these characteristics would appear to be an extension of credit to the Venezuelan government" – a measure forbidden by U.S. sanctions - and that "U.S. persons that deal in the prospective Venezuelan digital currency may be exposed to U.S. sanctions risk."

In reference to the Petro, a spokesperson for Menenedez said: "We continue to look for ways to prevent the Maduro regime from brazenly evading U.S. sanctions and plan to follow up with the Department of Treasury following their issuing of these guidelines."

Venezuelan President Nicolas Maduro has said the goal of the Petro is to combat sanctions and the "economic war" waged by the U.S. government and its junior partners against his country and advancing "on issues of monetary sovereignty, to make financial transactions and overcome the financial blockade."

The launch of the Petro was announced in December. It is regulated by the Superintendence of Cryptocurrencies and Related Activities, as well as the Blockchain Observatory.

Russia and Iran have expressed interest in developing their own digital currencies to help combat U.S.-imposed sanctions, following this week's successful launch of Venezuela's first cryptocurrency. Mohammad-Javad Azari Jahromi, head of Iran's Ministry of Information and Communications Technology, said the test model for a "cloud-based digital currency" is currently under development and will be submitted to the Iranian bank system soon.

The Iranian official announced the move following a meeting with the state-owned Post Bank of Iran on Wednesday, according to NPR.

"In a meeting with the Board of Directors of the Bank on post-digital currencies based on the blockchain, I... prescribed, the Bank measures to implement the country's first cloud-based digital currency... An experimental model for the country's banking system to the examination and approval will be provided," Azari Jahromi said in this translated tweet.

Meanwhile, Venezuelan Financial Minister Simon Zerpa Delgado was in Russia this week, where he spoke with officials about strengthening collaboration and about the Latin American nation's newly launched cryptocurrency.

"In this meeting, we have reviewed the economic and financial cooperation between the two countries, with emphasis on the new cryptocurrency of Venezuela: the Petro. We delivered updated information to Minister Anton Siluanov about our cryptocurrency,"  Delgado tweeted. 
Russian officials have previously exchanged ideas about issuing some kind of digital equivalent of the ruble to circumvent U.S. sanctions, according to The New York Times.
China and Singapore have also expressed interest in creating their own forms of cryptocurrency, but experts say the nations will wait to judge Venezuela's success with the Petro before bringing their own versions to market.

Cryptocurrencies typically are not backed by any government or central bank, nor are they regulated. However, the U.S. Security and Exchanges Commission has been increasingly tracking digital currencies, classing some tokens as securities, thus making them subject to oversight.

Maduro said: "We have taken a giant step into the 21st Century... We are on the world's technological vanguard."

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