Venezuela Accelerates Shift to Tether (USDT) Amidst Tightening US Sanctions

• For the last year, PDVSA has been progressively shifting its oil sales to USDT.
• This shift is being expedited by the return of oil sanctions.

In response to the harsh U.S. sanctions, Venezuela’s state-run oil firm PDVSA has reportedly taken further steps to diversify its revenue streams away from traditional fiat currency and toward digital assets such as Tether (USDT).

The United States Department of the Treasury requested last week that all PDVSA users and service providers cease all transactions until May 31. Companies will have to wait for specific U.S. authorizations to conduct business with Venezuela, which will make it more difficult for Venezuela to increase its oil production and exports.

By Passing Sanctions

For the last year, PDVSA has been progressively shifting its oil sales to USDT, Tether’s stablecoin linked to the US dollar. According to people acquainted with the situation, this shift is being expedited by the return of oil sanctions, which are meant to reduce the likelihood that sale revenues would be frozen in foreign bank accounts as a result of these penalties.

Pedro Tellechea, Venezuela’s minister of oil, told Reuters last week that digital currencies are being considered as a possible preferred payment option for some oil contracts. Although cryptocurrency payments are starting to gain traction in certain nations, the US dollar is still the de facto standard for international oil trade.

At the conclusion of the first quarter of 2024, PDVSA instituted a contractual framework that required 50% of the value of each shipment to be paid in USDT upfront for a large number of spot oil contracts (excluding swaps). Cryptocurrency stored in a digital wallet is also required of all new clients by PDVSA in order to conduct oil transactions. 

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