Venezuela is discontinuing the petro cryptocurrency, launched six years ago by President Nicolas Maduro to bypass US sanctions, due to its failure to gain traction and involvement in a corruption scandal.

All crypto wallets on the Patria Platform, the sole trading site for the petro, will cease operations on Monday, January 15, as announced on the platform's website.

Any remaining petros will be converted to bolivars, the local currency facing economic challenges.

The failure of the petro suggests that perhaps there may that be more domestic issues that affects the Venezulan economy than just US sanctions.

Understanding Petro

Launched in February 2018 with the backing of Venezuela's petrol reserves and priced at US $60 per unit, the petro was intended to provide alternative avenues for international financing amid US sanctions.

However, it faced criticism as citizens struggled to comprehend its usage, earning labels like "scam" from certain risk rating bodies.

President Maduro attempted to revive the cryptocurrency in 2020, mandating its use for airline fuel payments and state services, including obtaining a new passport.

Despite these efforts, its utilization remained confined to specific state transactions such as tax payments, with traffic fines issued in petros but unable to be settled with the cryptocurrency.

The government compelled banks to report balances in both bolivars and petros, and on the Patria Platform, primarily employed for government subsidies, users could only exchange petros for bolivars through an auction system.

Doomed For Failure

The demise of the petro was sealed by a corruption scandal in 2022, revealing irregularities in managing funds from oil operations involving crypto assets.

This led to the resignation of the influential petroleum minister Tareck El Aissami and the detention of numerous officials, including high-ranking members of the Sunacrip crypto regulator.

The fallout also triggered a crackdown on bitcoin mining operations in Venezuela, where cryptocurrencies like bitcoin served as popular safeguards against hyperinflation and bolivar deflation.

According to a 2022 survey presented at the United Nations Conference on Trade and Development, 10.3 percent of Venezuelans own crypto, surpassing the figures for Americans (8.3 percent) and Britons (5 percent).