The National Constituent Assembly of Venezuela is prepared to change the Constitution of the country in order to create the first central bank for cryptocurrency. The embattled South American nation has already launched its own cryptocurrency – called the petro – which is backed by the country’s oil reserves in the Orinoco belt.

Cryptocurrency – the Latest Bid to Save Venezuela’s Dying Economy?
Venezuela is going through the worst economic crisis in its history. The autocratic leadership imposed by President Nicolas Maduro has alienated the country from most of the exchange, stock and capital markets. The United States have imposed strict financial sanctions on the failed socialist South American country and other nations instituted a de-facto embargo on Venezuelan goods.

Under these dire conditions, in February 2018, President Nicolas Maduro announced the launch of the petro cryptocurrency. However, this move did not create a wave of enthusiastic buying, also considering the fact that the once successful Petroleos de Venezuela oil producing company is currently operating at its lowest capacity.

Could a Central Bank for Cryptocurrency Save the Petro and Venezuela?
Such is the general context in which the latest announcement concerning the central bank for cryptocurrency came. A member of the National Constituent Assembly of Venezuela explained that:
“The National Constituent Assembly of Venezuela…is preparing a reform to the Constitution that would include a central bank for crypto-assets and a superior court to the Supreme Court of Justice. […] The reform is expected to include the petro, a cryptocurrency announced by the government of President Nicolas Maduro in February as a way to increase its foreign exchange earnings, in the midst of the economic crisis and the sanctions imposed by the United States.”

Herman Escarra is a leader with a significant position in the National Constituent Assembly of the country. He is said to be “one of the most influential members of the assembly that prepares the changes to the 1999 constitution”, according to Reuters.

Escarra’s role in changing the Constitution of Venezuela comes after a series of significant changes in the legislation and the leadership of the country. In June 2018, Carlos Vargas, Venezuela’s Superintendent of Cryptocurrency, was dismissed by President Maduro.

One month later, on 25 July, Nicolas Maduro announced the new national currency of Venezuela, the Bolivar Soberano (Sovereign Bolivar) and stated that it would be linked to the petro cryptocurrency. The new currency will be officially launched on August 20.

If Anything, the Move Will Increase Legitimacy of Cryptocurrencies
It is unclear whether the planned founding of a central bank for cryptocurrency in Venezuela will bring about the desired results envisioned by its promoters. The lack of confidence in the petro cryptocurrency is, in fact, a direct reflection of the lack of confidence in President Nicolas Maduro and his leadership style.

However, the fact that a nation considers the step of having a central bank dealing exclusively with cryptocurrency is yet another move that promotes bitcoin, ethereum and other cryptocurrencies as legitimate means of payment for goods and services across the globe.