Nicolás Maduro helped make Tether the world’s dominant stablecoin. And with the former Venezuelan leader now sitting in a Brooklyn jail, the cryptocurrency’s central role in his nation’s economy is back in the spotlight.
Tether emerged as a vital tool for the state-run oil company to sidestep sanctions, serving as the currency for settling oil transactions. It also has offered a financial lifeline to everyday Venezuelans racked by the tumbling value of their home currency, the bolivar.
Maduro’s arrest and removal as Venezuela’s president is unlikely to diminish Tether’s presence in Venezuela, where hyperinflation remains a problem, according to crypto analysts.
“Crypto use in Venezuela will persist and likely expand in the short term,” said Adam Zarazinski, chief executive officer of the crypto-intelligence firm Inca Digital. “For everyday users, it’s a coping mechanism for economic dysfunction and failing institutions. But those same governance failures also enable sanctions evasion, an outcome that won’t change without credible improvements in governance.”
Faced with escalating U.S. sanctions in 2020, Venezuela’s state-run oil company, PdVSA, began demanding payments in Tether to bypass the traditional banking system. By one estimate, almost 80% of Venezuela’s oil revenue is collected in stablecoins like Tether. Not long after the sanctions took effect, Tether became a viable alternative currency for many Venezuelans, who used the stablecoin to send money across borders, secure savings and pay for daily transactions.