Crypto remittances to Venezuela increase as the economic situation worsens

As the economic situation in Venezuela continues to deteriorate, remittances of crypto-remittances from family members living abroad have increased to support residents inside the country suffering from persistent inflation and supply problems.

In 2023, cryptocurrencies accounted for 9% of the $5.4 billion in remittances sent to Venezuela, representing $461 million in value. Remittances to Venezuela have increased every year since 2018, except for 2020, according to Chainalysis.

Remittances are usually sent using services such as Western Union. However, relatively high fees, waiting times and currency supply issues can often make these services, as powerful as they are, unsuitable for individuals in the developing world.

Venezuela’s economic nightmare

Despite having the world’s largest proven oil reserves, Venezuela’s economy continues to be plagued by persistent inflation, crushing sanctions, supply problems and government corruption.

In 2018, the Venezuelan government created a state-backed cryptocurrency called “Petro” to circumvent United States sanctions against the energy-rich country. Unfortunately, the cryptocurrency failed to gain widespread adoption due to perceived corruption and its lack of legal tender status within the country.

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Even Venezuela’s central bank refused to accept the Petro, and after six long years of the currency barely surviving, it was shut down in 2024. However, that didn’t stop the Venezuelan government from once again turning to digital assets to circumvent US sanctions .

Earlier this year, reports began to emerge that the Venezuelan government was looking to use cryptocurrencies to facilitate international oil trade. In response, stablecoin issuer Tether announced it would freeze USDT (USDT) assets held by Venezuela in compliance with US sanctions.

Oddly enough, the country also suffers from widespread power shortages. In May 2024, Venezuelan officials announced a ban on crypto mining, claiming that cryptocurrency mining placed too much of a burden on the country’s power grid, which has been in crisis for the past 10 years.

Maduro’s government hostile to mining?

The May 2024 ban on crypto mining was not the first time Venezuelan officials have targeted mining operations and pursued anti-crypto policies.

In 2023, the country shut down mining facilities due to an ongoing corruption investigation into Venezuela’s oil industry and the head of its crypto ministry, Joseli Ramirez Camacho.

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