Sanctions-Driven Crypto Fiscal Revolution: Venezuela's Stablecoin Sovereignty Experiment

Original Author: Byron Gilliam

Original Compilation: Saoirse, Foresight News

Editor's Note: Venezuela is the first country to delegate a significant portion of its fiscal affairs to cryptocurrency management—due to US sanctions, approximately 80% of its oil sales are conducted using USDT as the medium of exchange, and USDT has permeated various fiscal areas including retail. While other countries have explored cryptocurrency applications: El Salvador made Bitcoin legal tender in 2021, and Bhutan launched a national-level crypto payment system for tourists in 2025, neither involved the core area of "a significant portion of fiscal affairs." What is the underlying logic and challenges behind Venezuela's unique practice? This article provides an in-depth analysis.

Venezuelan President Nicolás Maduro | Image Source: StringerAL/Shutterstock and Adobe, modified by Blockworks

"I don't think the process they call 'dollarization' is a bad thing... Thank God, this process does exist."

—Nicolás Maduro, President of Venezuela

A recent report by The New York Times stated that Venezuela has become "the first country to delegate a significant portion of its fiscal affairs to cryptocurrency management."

But this was not a voluntary choice.

Approximately half of Venezuela's fiscal revenue comes from oil sales denominated in US dollars, and as a sanctioned country, it cannot legally send or receive dollars.

In the past, governments of sanctioned countries would settle oil transactions in dollars through complex networks of shell companies and offshore banking systems, or barter oil for goods or infrastructure investments.

Now, they have a simpler option: accept stablecoin payments. Economist Asdrúbal Oliveros estimates that the USDT stablecoin issued by Tether has become the medium of exchange for about 80% of Venezuela's oil sales.

The Venezuelan government once banned stablecoin transactions, believing they posed a threat to its national currency, the bolivar. However, the heavy blow from US sanctions left the country with no choice but to embrace stablecoins.

Current Venezuelan Vice President Delcy Rodriguez recognized as early as last August that cryptocurrency-driven dollarization was an inevitable trend. At the time, she told business leaders that the government was implementing "non-traditional management mechanisms" to better regulate the bolivar exchange rate.

Reuters reported shortly thereafter: "Since June of this year, the Venezuelan government has allowed the expanded use of USDT." With state approval, banks now sell USDT obtained from oil sales to local businesses, which use USDT to pay domestic and foreign suppliers.

The Venezuelan government also hopes stablecoins will circulate in the retail sector: the head of the country's national supermarket association recently told state television that grocery stores are advancing system development to support USDT payments.

In other words, the Venezuelan government is encouraging its people to use the "dollar" issued by Tether, rather than the bolivar issued by the nation itself.

Therefore, as a stablecoin supporter, I was disappointed that in the US government's indictment against Nicolás Maduro, cryptocurrency (including stablecoins) was not mentioned at all.

Instead, the indictment described very traditional methods of illicit fund flows: planes returning from Mexico "loaded with drug proceeds," exchanging weapons like grenades and rocket launchers for cocaine, using a portion of transported cocaine as "protection fees," and a $2.5 million cash bribe.

Why no mention of cryptocurrency at all?

There are two possible reasons: 1) The US government has ceased making negative comments about cryptocurrency, so prosecutors deliberately avoided the topic cautiously; 2) The scale of funds that cryptocurrency (and stablecoins) can handle is still insufficient to meet the needs of Maduro and his associates.

While the first explanation is more interesting, the second possibility is clearly more likely.

Asdrúbal Oliveros explains: "The Venezuelan government finds it difficult to quickly liquidate these (crypto) assets because transferring crypto funds requires going through multiple control processes, and the requirements for these processes are currently not met."

A report by TRM Labs reached a similar conclusion: "Large trafficking organizations still heavily rely on physical cash, trade-based money laundering, and state/quasi-state protection when moving core illicit proceeds; cryptocurrency typically plays only an auxiliary or supplementary role and cannot replace these traditional methods."

National security analysts at Lawfare magazine agree with this view: "Compared to traditional illicit financial channels, the scale of using cryptocurrency to evade sanctions remains negligible."

However, some hold a more optimistic view regarding the role of stablecoins and cryptocurrency in "international payments."

For example, InSight Crime reported that Mexican drug cartels rely on "industrial-scale cryptocurrency money laundering networks" to operate—these networks transfer illicit funds to Chinese chemical suppliers through digital channels.

The report details that stablecoins have found a specific niche between two groups: Chinese currency brokers who need to sell dollars to clients evading China's capital controls, and Mexican drug cartels who need to purchase fentanyl precursors from China.

While this is not the "product-market fit" cryptocurrency advocates hoped for, the practical application shows stablecoins are highly influential in such scenarios. For instance, the US Drug Enforcement Administration (DEA) stated that due to criminal groups "prioritizing cryptocurrency over traditional cash laundering schemes," the amount of illicit cash seized by the agency has significantly declined.

Correspondingly, seizures of "virtual currency" have risen markedly: from 2020 to 2024, the DEA seized a total of $2.5 billion in cryptocurrency, exceeding the $2.2 billion in cash seized during the same period.

This may explain why Maduro and his associates still insist on using traditional payment methods—traceable cryptocurrency and freezable stablecoins have not yet met the needs for large-scale money laundering.

Nevertheless, Venezuela's adoption of the digital dollar is groundbreaking. Lawfare concludes: "US adversaries have established a functional proof-of-concept, and emerging financial technologies may further entrench this model."

If this is indeed the case, it may also further entrench the position of the US dollar.

Being prohibited from using traditional dollars did not lead Venezuela to choose currencies like the yuan for oil settlement—the government simply switched to using the digital dollar instead.