Venezuela Launches the Petro

February 23

With most governments regularly issuing warnings against cryptocurrencies, Venezuela, on Tuesday, became the fist government to issue its own cryptocurrency, with the pre-launch of the Petro.  President Maduro announced on Twitter first-day presales of $735 million, though news outlets reported that the figure could not be substantiated.  The Venezuelan government says that each unit of the petro is pegged to the price of one barrel of Venezuelan oil.

Many questions have been raised about the Petro.  It has been opposed by opposition legislators in Venezuela’s opposition-controlled legislature. They say that the Maduro government is essentially issuing oil-backed debt, and that cannot be done legally without approval from the legislature.  For its part, the U.S. Treasury has warned U.S. investors to approach the Petro with caution, saying that it may contravene U.S. sanctions against the Venezuela.  And, of course, the whole concept of a top-down, government controlled asset is the antithesis of the decentralized system that is the centerpiece of  the appeal of cryptocurrencies to the purists.

Nevertheless, the Petro will undoubtedly be watched closely as other governments, most recently Russia and Turkey, are actively discussing issuing their own cryptocurrencies.

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David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.

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