India offered a $1.6bn oil discount, if it pays in crypto

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Petros for sale. 
 Venezuela's President Nicolas Maduro. Photo: Reuters/Carlos Garcia Rawlins

It’s not difficult to understand why Nicolas Maduro is trying very hard to sell his Petro crypto coin. Launched in late 2017 with the aim of circumventing US trade sanctions while also attempting to ease the pressure on the ever-sliding Bolivar – Venezuela’s inflation rate rose from 4,000% last year to 18,000 % in April and some economists say it could hit 100,000 % by the end of the year – the Petro could be the last roll of the monetary dice for President Maduro.

He claims the token, that supposedly is backed by the country’s oil assets, raised $5 billion after it went on public sale in March and, while domestically opposition politicians argue that is illegal and many in the crypto industry have said it is a national-level scam, Maduro seems to be doing all he can to use it to turn some quick profit.

According to local news outlet Correo del Orinoco, the Venezuelan president has pushed the country’s financial authorities to register 16 new crypto exchanges and the aim is clear. Make it easier for the country’s citizens to purchase the world’s first state-backed crypto-currency.

Maduro also seems to be extending the government’s crypto platform and, via an April 27 announcement, he reportedly told the Venezuelan people they could now invest in the country’s gold, via a Central Bank of Venezuela crypto-based “‘petro oro” initiative.

Now news has emerged that Venezuela, the world’s second-largest crude oil producer, has tried to cut a deal with India, according to Quartz, by offering a 30% discount on petroleum sales if, yes you’ve guessed, payments are made using the Petro.

Quartz says that India imported something like 8% of its oil needs from Venezuela in 2017, which would have cost $5.5 billion. So a 30% discount? That’s close to $1.6 billion.

Temping indeed but … Delhi has just done a lot to try to squash trade in crypto-currencies.

Earlier this month the Reserve Bank of India announced new measures banning banks under its control from investing in crypto-currency markets.

This came after finance minister Arun Jaitley last year called cryptos “Ponzi schemes which can result in sudden and prolonged crash exposing investors.” In February he added to his criticism by telling Indian lawmakers to “take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.” Presumably that would include purchasing oil worth $5 billion?

The Reserve Bank of India might be now studying the feasibility of an Indian state digital currency but it is also far from supportive of the wider international crypto landscape.

“Internationally, while the regulatory response to these tokens are not uniform, it is universally felt that they can seriously undermine the anti-money laundering … framework, adversely impact market integrity and capital control,” said the bank earlier this month.

What a dilemma to have. Make a quick $1.6 billion? Or stick to your principles. Can India dare go down Maduro’s crypto rabbit hole? Is this Delhi’s red pill, blue pill moment?

So, what would you do?

Please contact us with feedback, news or stories: thechain@atimes.com

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