Cryptocurrencies have been utilized by many nations in times of economic distress, Venezuela is no stranger to this. The nation has battled inflation for several years and has turned to digital currencies in various situations. Now, the nation is set to utilize stablecoin maker Circle’s USDC to route aid for its healthcare workers at a time when the Latin American country’s government is in a mess.
The political situation in Venezuela is a bit tricky as the nation currently has two presidents. On one side there’s Nicolás Maduro, the socialist leader who came into power in 2013. On the other side stand’s Juan Guaidó, leader of the National Assembly, that declared him acting president in January last year.
More than 50 nations including the United States recognize Guaidó as the rightful leader of Venezuela, and as a result, the U.S. has placed sanctions on the Maduro regime. In return, Maduro has limited Guaidó’s access to cash.
This is where Circle steps in. along with Latin American crypto exchange Airtm to be able to provide funds to the nation’s health workers who are fighting the COVID-19 pandemic in that region.
“The US Treasury and Federal Reserve releases seized funds to the Guaidó government’s account at a US bank. The Guaidó government then uses those funds to mint USDC. The USDC is then sent to Airtm,” Circle explained.
The freshly minted USDC is then transferred to Airtm wallets, which would then go to the Venezuelan healthcare workers in the form of AirUSD, Airtm’s native fiat-backed stablecoin. The recipients would then be able to withdraw these funds at banks, send the funds, or spend them online.
The U.S. treasury department has been sending funds seized from the Maduro government to Venezuelan health workers since September. However, transferring funds weren’t so simple despite the fact that the Trump Administration gave Guaidó control over Venezuelan government assets within the US in 2019.
But now, the U.S. government is using USDC as a workaround to feed the opposition funds. The plan is heavily dependent on Airtm, which isblocked in Venezuela since 2018. However, an Airtm spokesperson noted that users have no trouble accessing the platform when using a VPN.
Meanwhile, Maduro is also leveraging blockchain technology in an effort to bypass economic sanctions. Last month, the nation launched a decentralized stock exchange to offer tokenized versions of various traditional assets.
According to various reports on the operation manual of the exchange, these assets will be tokenized on the Ethereum blockchain using ERC-223 and ERC-721 token standards.