Venezuela has become a hotbed for cryptocurrency, despite its reputation as a risky investment. With the government’s launch of the Petro cryptocurrency in 2018, backed by the country’s natural resources, many were hopeful that it would bring economic stability. Unfortunately, corruption tainted the project, leading to its downfall.

Enrique de los Reyes, president of Venezuela’s crypto business association, CAVEMCRIP, sheds light on the state of cryptocurrency in the country. In an interview at his office in Caracas, he explains the role of crypto assets, the challenges, and the potential for growth.

Crypto and Remittances

One of the main reasons why cryptocurrency has flourished in Venezuela is its role in cross-border transactions, particularly remittances. With millions of Venezuelans living abroad, sending money back home has become vital. Crypto assets offer a secure and low-cost way to transfer funds, circumventing the limitations set by international financial institutions.

Overcoming Sanctions

The use of cryptocurrency in Venezuela has also been driven by the country’s struggle with financial sanctions. Many financial institutions have cut ties with Venezuela, making traditional banking transactions difficult. Cryptocurrencies provide an alternative way to perform transactions without relying on traditional banks. It’s important to note that the use of crypto assets is not illegal or evading sanctions. It simply allows the private sector and families to navigate around the side effects of sanctions and engage in international transactions.

The Size of the Crypto Sector

While it is challenging to determine the exact size of the crypto sector, it is undoubtedly a billion-dollar industry in Venezuela. In 2022, formal crypto payments through authorized banks and exchange houses amounted to $125 million. Furthermore, Venezuela ranked fourth in terms of trading volumes on the LocalBitcoin platform, with $707 million traded in 2019. Approximately 10% of Venezuelans currently use crypto assets.

It’s worth noting that there are also smaller and informal exchanges operating without licenses, especially for remittance purposes. These unregulated exchanges have facilitated millions of transactions in Venezuela, with remittances accounting for 5% of the country’s GDP.

Challenges in Crypto Mining

Venezuela has emerged as a leader in crypto mining due to subsidized energy costs and abundant energy sources. However, the sector faces challenges with unreliable electricity supply and the environmental impact of energy-intensive mining operations. To address these issues, the crypto sector is investing in solar power farms and exploring the use of natural gas. Additionally, efforts are underway to develop a legal framework for crypto mining and regulate its environmental impact.

CAVEMCRIP: Building Trust and Collaboration

Enrique de los Reyes is now the president of CAVEMCRIP, an organization focused on restoring trust and promoting collaboration within the crypto sector. CAVEMCRIP aims to bring together various stakeholders, including exchange houses, mining companies, education providers, lawyers, accountants, compliance agents, and banks. By fostering dialogue and proposing regulatory measures, CAVEMCRIP aims to create a regulated and professional crypto sector that operates with transparency and integrity.

Bringing BitBase to Venezuela

Enrique de los Reyes is leading BitBase, a Spanish crypto exchange company, into the Venezuelan market. BitBase offers both online platforms and physical stores with ATMs for buying and selling crypto assets and fiat currency. Given the importance of such services in Venezuela, BitBase is evaluating opportunities to operate within established norms and regulations.

In conclusion, cryptocurrency has found a unique footing in Venezuela, serving as an alternative to traditional banking and facilitating cross-border transactions. Despite challenges, the crypto sector continues to grow, offering potential economic opportunities for the country. Through organizations like CAVEMCRIP and companies like BitBase, efforts are underway to foster trust, regulation, and collaboration within the industry.

Note: This article has been updated to reflect accurate trade volumes on the LocalBitcoin platform, with Venezuela ranking fourth among countries with the highest volumes.