President Donald Trump has sanctioned Venezuela's new currency, the petro, a cryptocurrency that the U.S. government says is intended to evade international penalties on the nation's regime.
The order issued on Monday prohibits all transactions related to the petro or other digital currencies issued to benefit Venezuela's government.
The sanctions are the latest effort by Trump to pressure Venezuelan President Nicolás Maduro, who has increasingly clamped down on the country's opposition. Maduro ostensibly offered the tokens as a way to raise money and evade sanctions as Venezuela descends into political and economic crisis.
“The petro is a scam ripe for exploitation,” a senior administration official said on a conference call with reporters. “Investing in the petro should be seen as directly supporting the dictatorship” of Maduro.
Maduro claimed the new currency would be backed by oil from the petroleum-rich country's nationalized energy industry, and that $735 million has already been raised through its issuance.
But despite a high-profile televised January rollout featuring Maduro himself, skepticism about the currency reverberated through the cryptocurrency world. Bitcoin supporters often cite it as a hedge against the kind of rapid inflation that Venezuela's original currency, the bolívar, has experienced under Maduro.
White House and Treasury officials said the U.S. had not yet made a decision on sanctions targeting Venezuela’s oil industry, the backbone of the country’s economy.
“As the president has made very clear, all options are still on the table” regarding Venezuela, said the senior administration official. But oil sanctions against the South American country’s government could have broader implications on ordinary Venezuelans, as well as the U.S. and regional economies.
"While Venezuela's attempt to issue a cryptocurrency is novel, there's nothing new about the U.S. restricting financial dealings with sanctioned countries," said Jerry Brito, executive director of the D.C.-based nonprofit Coin Center in a statement. "Issuing a cryptocurrency is not going to help Venezuela escape sanctions."
The official said the sanctions applied only to cryptocurrencies directly issued by or to benefit the Venezuelan government. U.S. individuals or exchanges that move cryptocurrencies that had at one time been exchanged for petros would not be subject to penalties as long as they do not deal with the Venezuelan currency itself.
Sen. Marco Rubio (R-Fla.), an outspoken critic of the Maduro government, praised the sanctions.
“This move against corrupt officials in the Maduro regime targets their ability to use cryptocurrencies to circumvent U.S. and international sanctions,” the Florida Republican said in a release. “I commend the president and his administration for continuing to take action against efforts by the illegitimate Maduro regime to exploit illicit financial lifelines, and encourage additional sanctions in the weeks to come.”
In addition to Monday's sanctions against the petro, Treasury announced financial penalties against four more current or former Venezuelan government officials over "economic mismanagement and corruption."