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USDT for Oil: Venezuela Is Increasingly Relying on Tether to Evade US Sanctions
Latin America and the Caribbean
Image Credit: Dall-E 3
Venezuela's state oil company, PDVSA, is accelerating its adoption of USDT (Tether), for oil exports to circumvent the reintroduction of U.S. oil sanctions and the non-renewal of a general license that allowed for certain transactions. Moving away from traditional banking systems towards cryptocurrency-based transactions, this shift aims to mitigate the risk of having sale proceeds frozen in foreign bank accounts. Despite the U.S. dollar being the standard currency for global oil transactions, PDVSA has increasingly demanded prepayment in USDT for oil trades and is requiring new customers to maintain cryptocurrency wallets. "USDT transactions…don't pass any trader's compliance department, so the only way to make it work is working with an intermediary," one trader said, referring to how paying for oil with digital currencies is still highly unusual. PDVSA has increased its reliance on middlemen for its oil sales, particularly to China, since the U.S. imposed secondary sanctions on Venezuela in 2020, disrupting its relationship with large trading partners. Tether said it respects the U.S. Treasury's list of sanctioned entities and "is committed to working to ensure sanction addresses are frozen promptly."
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