<div id="readability-page-1"><div><div><p>Author: Blockworks; Translator: Deep Tide TechFlow</p><p>&#34;I don't think it's a bad thing, their so-called 'dollarization' process... thank God it exists.&#34;</p><p>—Nicolas Maduro</p><p>The New York Times recently reported that Venezuela has become &#34;the first country to manage a large portion of its fiscal revenue using cryptocurrency.&#34;</p><p>But this wasn't a deliberate choice.</p><p>About half of Venezuela's revenue comes from oil sales denominated in US dollars. As a sanctioned country, Venezuela cannot legally send or receive US dollars.</p><p>Previously, sanctioned governments typically used a network of shell companies and offshore banks to convert oil into US dollars—or exchange oil for goods or infrastructure investments.</p><p>Now, they have a simpler option: accepting stablecoin payments.</p><p>Economist Asdrúbal Oliveros estimates that Tether's USDT is the medium of exchange for approximately 80% of Venezuela's oil sales. The Venezuelan government had previously banned the use of stablecoins for transactions, viewing them as a threat to the bolivar. However, the devastating impact of US sanctions left it with virtually no choice but to embrace stablecoins. Venezuela's current interim president, Delcy Rodriguez, acknowledged the inevitability of crypto-driven dollarization last August. She told business leaders at the time that &#34;unconventional management mechanisms&#34; were being implemented to better manage the bolivar's exchange rate. Reuters shortly thereafter reported: &#34;The Venezuelan government has allowed greater use of USDT since June.&#34; With state approval, banks are now selling USDT earned from oil sales to local businesses, which use this USDT to pay domestic and foreign suppliers. They also hope stablecoins will circulate at the retail level: the head of Venezuela's National Supermarket Association recently stated on national television that grocery stores are undergoing system upgrades to accept USDT payments. In other words, the Venezuelan government is encouraging the use of Tether-issued dollars to replace the government's own bolivars. As a result, USDT—which many Venezuelans call &#34;Binance Dollar&#34;—is now used in a wide range of scenarios, from buying groceries and paying apartment management fees to sending wages and paying suppliers. Therefore, as a stablecoin enthusiast, it is truly disappointing that the US government's indictment of Nicolás Maduro didn't even mention cryptocurrencies and stablecoins. The indictment describes illicit financial flows following a familiar pattern: planes returning from Mexico &#34;loaded with drug proceeds&#34;; weapons such as grenades were bartered for cocaine; protection money was paid through a share of the cocaine being transported; and $2.5 million in cash bribes were accepted. Why wasn't cryptocurrency mentioned? There are two possibilities: 1) The US government has stopped publicly criticizing cryptocurrencies, and prosecutors know when to gloss over it; 2) Cryptocurrencies and stablecoins are still insufficient to meet the financial demands of Maduro and his associates. The former is more interesting; the latter is more likely the truth. &#34;States find it difficult to quickly liquidate these (crypto) assets,&#34; explains Asdrúbal Oliveros, &#34;because transferring crypto funds requires navigating various controls that are currently not in place.&#34; A report by TRM Labs reached a similar conclusion: &#34;Large-scale drug trafficking organizations still heavily rely on physical cash, trade-based money laundering, and protection from state or quasi-state institutions when transferring core proceeds; cryptocurrencies typically play a secondary or supplementary role, rather than replacing these mechanisms.&#34; Analysts at the national security think tank Lawfare agree: &#34;Cryptocurrency-based sanctions circumvention remains a drop in the ocean compared to traditional illicit financial channels.&#34; Others are more optimistic about the practicality of stablecoins and cryptocurrencies in the field of &#34;international payments.&#34; For example, InSight Crime reported that Mexican drug cartels are being maintained by an &#34;industrial-scale crypto money laundering pipeline&#34; that channels illicit funds through digital networks to Chinese chemical suppliers. They detailed a niche market that stablecoins have found: acting as intermediaries connecting Chinese money brokers who need dollars to sell to clients circumventing Chinese capital controls with Mexican drug cartels that need to purchase fentanyl-blended chemicals from China. This isn't the product-market fit crypto enthusiasts expected, but in practice, the fit is quite strong. For instance, the DEA stated that its seizures of illicit cash have decreased significantly because criminal groups are &#34;placing cryptocurrency above traditional cash laundering schemes.&#34; Correspondingly, seizures of &#34;virtual currencies&#34; have increased significantly: between 2020 and 2024, the DEA seized $2.5 billion in cryptocurrency, compared to only $2.2 billion in cash. This may explain why Maduro and his associates insist on using more traditional payment methods—traceable cryptocurrencies and freezeable stablecoins—and are not yet prepared to handle the largest-scale money laundering demands. Nevertheless, Venezuela's embrace of the digital dollar is setting a precedent. Lawfare concludes: &#34;America's adversaries have established a working proof-of-concept, and emerging financial technologies may further solidify it.&#34; If so, the dollar itself may also be further consolidated. Being banned from using the dollar did not lead Venezuela to switch to the yuan for oil settlements—but rather the government to adopt a digital dollar.</p></div></div></div>

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<p>Venezuela, facing US sanctions that restrict its access to the dollar system, has turned to cryptocurrency, particularly Tether's USDT, for a significant portion of its oil sales. Approximately 80% of these sales are now conducted using USDT, as the government seeks to manage its fiscal revenue amid economic challenges. Despite previous bans on stablecoins, the Venezuelan government is now encouraging their use in various transactions, including retail payments. This shift highlights a growing trend of cryptocurrency adoption in sanctioned economies, although traditional cash remains prevalent in illicit financial activities.</p>

- Venezuela has become the first country to manage a large portion of its fiscal revenue using cryptocurrency, primarily stablecoins like Tether's USDT due to US sanctions restricting dollar access.  
- The government is encouraging the use of USDT to replace its own bolivar, enabling transactions from retail payments to supplier fees.  
- Analysts observe that while cryptocurrencies play a supplementary role in illicit financial flows, Venezuela's embrace of digital dollars may set a precedent, further consolidating the dollar in global markets.

Venezuela, kicked out of the dollar system by US sanctions, turns to USDT