Tether Will Block Addresses of Sanctioned Institutions
The statement came in response to a recent Reuters news story about Venezuela’s use of USDT.
Tether, the crypto company that issues the USDT stablecoin, will block the addresses of any actor sanctioned by the United States. A spokesperson for the company told a media outlet that they will crack down on illicit activities linked to trading in their token.
The decision comes after Reuters reported that the Venezuelan oil giant would be close to turning towards cryptocurrencies in the face of the reiterated imposition of sanctions against it. The company would begin to receive payments with USDT in exchange for crude oil shipments.
A spokesperson for Tether, the issuer of the USDT stablecoin, reported that the company will proceed with the freezing of accounts linked to entities sanctioned by the Office of Foreign Assets Control (OFAC) in Venezuela.
In the last six months, Caracas and Washington have eased their historic tensions by reaching a preliminary agreement. This pact established a political dialogue between the Venezuelan government and opposition forces in exchange for lifting some sanctions imposed on the country’s oil industry. However, tensions escalated again this month, leading the United States to announce that it will not extend relief from imposed sanctions.
The latter means that the country is once again banned from accessing payment systems to trade goods and services. Hence, the search for alternatives would be active from Caracas at this time and USDT would present itself as a candidate to avoid sanctions.
Tether’s Statements
As mentioned above, after Reuters published a report in which they revealed Venezuela’s intention to increase the use of cryptocurrencies in its operations to avoid the sanctions imposed by the United States, a Tether spokesperson reported that the accounts related would be frozen.
At the same time, the spokesperson stated that, consistent with Tether’s respect for OFAC’s SDN (Specially Designated Nationals and Blocked Persons) list, the issuing company would maintain its commitment and collaboration with funds blocking processes.
Reuters’ Report
The report by Reuters particularly points out that Venezuela’s intention to use digital assets in its transactions includes crude oil and fuel exports, since this sector is one of the most affected by US sanctions.
After the political disqualification of María Corina Machado, one of the opposition leaders with the greatest support in the Latin American country, the US accused Venezuela of not respecting the provisions of the Barbados Agreement.
In the aforementioned agreement, celebrated in October 2023, various pacts were established regarding the rights of political actors, electoral guarantees and the holding of presidential elections in 2024, which would have been violated with the political disqualification of Machado, as well as also the successive events that made it impossible for her standard bearer to participate in the next elections.
Effects in Venezuela
Based on the complaints made, the US resumed sanctions against Venezuela, so the Treasury Department required customers and suppliers of Petróleos de Venezuela (PDVSA), the state crude oil company, to settle any pending transactions before May 31.
Due to the sanctions, sources close to PDVSA indicated that the company would be adapting its operations to increase the use of cryptocurrencies as a payment method, particularly Tether’s USDT, since it is a stablecoin that maintains 1:1 parity with the US dollar.
In turn, the Reuters report indicated that the agreements for the payment of crude oil in spot for 2024 would have been altered to convert them into contracts that require advance payment in USDT, in addition to only considering new clients who have funds in cryptocurrencies.
By Audy Castaneda