Venezuela is regarded as one of the richest oil-producing countries in the world. Venezuela is a country that has been dramatically affected due to recession and hyperinflation. This had a significant impact on the country’s economy as a whole. This, in turn, helped cryptocurrency in Venezuela to flourish.
The cryptocurrency market is a framework of a decentralized exchange. It remained in an ambiguous shell that is not known to the general public.
There have been numerous blog posts providing crypto rewards that give an idea about how citizens are making decent living from crypto currency.
Cryptocurrency in Venezuela
An in-depth analysis of Venezuela permits us to go through the de-virtualized understanding of cryptocurrency. It elucidates that the cryptocurrencies are not susceptible to the ups and downs and vulnerability in the market, on the other hand, the cryptocurrency markets flourish from the context of vulnerability and crises that occur.
Hence, one of the main reasons for the rise of cryptocurrency’s popularity is the availability of cheap electricity, which greatly increased cryptocurrency mining in the country.
Banco de Venezuela has taken an initiative and has launched the country’s Central Bank Digital Currency which would act as the country’s monetary makeover. This helped to cut six zeroes from the currency and combat the rapid inflation that is taking place. It also provides SMS-based systems for facilitating all payments. Therefore, the bank claimed that the CBDC and redenomination of the currency will have no effect on the bolivar’s value and that the overhaul is part of a move to simplify the use of the currency.
New Regulatory Framework regarding Cryptocurrency
Venezuela has introduced a new regulatory framework for businesses working with crypto assets, according to an official gazette published by Venezuela’s Ministry of Popular Power for Communication and Information (MIPPCI).
Additionally, Businesses are now required to register with the Superintendencia Nacional de Criptoactivos y Actividades Conexas (Sunacrip), which oversees Venezuela’s crypto activity. The regulations cover issues like business registration and audit requirements, as well as penalties for noncompliance. The framework applies to all crypto service providers in Venezuela, which includes platforms and miners.
Sunacrip is responsible for inspecting and auditing crypto service providers and has the power to act in response to noncompliance with regulations. Sunacrip can revoke licenses, and seize and retain assets if individuals are found to be in violation of regulations.
The government also legalized Bitcoin mining in 2020 and declared that all miners must apply for a mining license by registering with the Integral Miners Registry (RIM) and conduct their activities in compliance with National Mining Pool (NMP) regulations. All miners who do not adhere to these guidelines will be penalized.
FATF Status of Venezuela and AML regulations
The FATF has deemed Venezuela to be sufficiently compliant with AML regulations. The Venezuelan government has made sure to adhere to its commitments according to the FATF’s Action Plan based on the strategic deficiencies the FATF noted in the country in 2010. Since making the necessary changes, Venezuela is no longer subject to the FATF’s rigorous global AML/CMT monitoring process.
However, Venezuela continues to be monitored by the US States Department, which sees it as a Country/Jurisdiction of Primary Concern concerning financial crimes and money laundering.
There are still issues of drug trafficking, rampant public corruption, and illegal mining that are yet to be dealt with. The President of Venezuela himself, Nicolás Maduro, has been reported to be using the proceeds of these financial crimes to fund his regime. The economy of Venezuela is also infamous for being in a long-term recession due to these financial crimes. Hence, much must still be done before Venezuela can be viewed as a financially secure country. However, it seems to be taking a step in the right direction by regulating cryptocurrency and embracing the new technology.
Cryptocurrency Taxation in Venezuela
Recently, Venezuela Government has accepted a new tax system that majorly affected transactions made in foreign currency as well as cryptocurrency transactions. The National Assembly of the country approved the tax called “Large Financial Transactions”.
It was developed to motivate the national currency that disoriented its relevance in a multi-currency environment.
The Government has announced a limit on the transactions as well as the payments made in foreign currency. The citizens are required to pay 20% of the amount for each movement.
Moreover, as the country has approved the tax on cryptocurrency, Venezuela has now shifted its focus to authorizing the Bolivar, which is regarded as the go-to currency that will provide ease of purchase in the country. Hence, based on the survey of several economists, it would be treated as a risk that will affect the country as a whole.
Why is Venezuela becoming a Bitcoin Mining hub?
Bitcoin is earned in two different ways. People can directly buy BitCoin using fiat currency. The other way is to simply mine Bitcoin using a specialized computer set-up. It is regarded as one of the specialist process in cryptocurrency. The Miners analyze and calculate each cryptocurrency transaction and receive crypto coins as a reward. It is a very time-consuming process, which requires a massive network of computers as it consumes a vast amount of energy as a whole. So, Bitcoin mining is increasing rapidly in Venezuela due to the low cost of electricity.
Popular Cryptocurrency coins in Venezuela
Here are the trending crypto coins in Venezuela:
Petro
Petro is a Venezuelan cryptocurrency that was introduced through the digital markets by the Venezuelan government. This coin was announced in December 2017 and was launched in February 2018. The Oil barrels backed the Petro currency in Venezuela. The PTR is exchanged for providing the different types of goods and services that are available for the citizens of Venezuela. Hence, it is exchanged for other cryptocurrencies through all exchange places in Venezuela.
Petro the cryptocurrency / digital asset of Venezuela country will change the way of thinking of cryptocurrency in the world as it is the first government-backed cryptocurrency and is tethered to the country’s mineral assets like oil assets.
Therefore, PTR can help to buy products and raw materials from e-commerce websites in the future. It may be the next digital currency for national and international business markets.
Ethereum
Ethereum is a decentralized exchange that provides smart contract capabilities. Ether (ETH) is the most popular coin in the Ethereum network and is now a native cryptocurrency in Venezuela. For market capitalization, it’s the second-largest cryptocurrency. The cost of one Ether is currently around USD 2013. Most cryptocurrency transactions in Venezuela are done using Ether.
The Ethereum blockchain connects thousands of computers around the world and forms a massive world computer that anyone can access, build, and execute programs on.
Ripple
Ripple was released in the year 2012. It is a shared and public database or ledger that supports worldwide money transactions of any amount without any charges. The network can work without the companies help.
Ripple backs tokens such as fiat currency and some different units that carry some value in
it. The financial institutions use this type of cryptocurrency to settle the infrastructure technology. Its regarded as one of the important coins in Venezuela. Ripple supports worldwide money transactions.
Bitcoin
Unlike other cryptocurrencies in the world, Bitcoin is not backed by anything. It is a decentralized digital currency and worldwide payment system. It works on a peer-to-peer network and all transactions are done directly between two users with no middle agent involved. The verification of transactions is done through connecting nodes, and all records are made public. Individuals providing the Bitcoin blockchain with access to their computers as nodes are rewarded with Bitcoins. These miners promote the use of Bitcoin by providing nodes that verify the transactions. Miners often receive awards for participating in these public transactions. Hence, Bitcoin transaction fees are significantly less and sometimes even optional.
About our Certified Anti-Money Laundering Professional course
Professionals in the financial sector may benefit from our AML courses, which will help them sharpen their skills and get an edge over their competitors. Regtech Times has launched a new certification Program, i.e., Certified Anti-Money Laundering Professional (CAMP), which is of the best international certifications in the market today. It will teach the learner how to tackle AML-related problems, the basics of AML, and more.
