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Venezuela to use cryptocurrency to evade sanctions

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Venezuelan President Nicolas Maduro.

Venezuela has announced plans to establish its own cryptocurrency system to carry out financial transactions and search for new financing options.

The country’s Finance Ministry announced in a recent statement that Venezuelan President Nicolas Maduro had issued an order to the same effect as a way to evade the impacts of US-led sanctions against the country.

"President Nicolas Maduro announced that Venezuela would create a cryptocurrency system, which will be called El Petro, in order to make progress on currency system and overcome financial blockade," the media quoted a statement by the Finance Ministry as saying.

The ministry noted that cryptocurrency is necessary for carrying out financial transactions and searching for new financing options.

In August, the United States imposed sweeping financial sanctions on Venezuela, forbidding US businesses from lending to the Venezuelan government or the state-run oil and gas company PDVSA.

The sanctions also cut into the dividends that PDVSA's US subsidiary Citgo may send back to Venezuela, according to a report by Russia’s Sputnik news agency.

The announcement comes the same week as the world's most popular cryptocurrency Bitcoin has broke past its $10,000 value mark, growing more than 11-fold since the beginning of the year.

However, some experts claim that such a quick rate of the currency's value growth may keep it from long-term sustainability.

Cryptocurrencies have been getting mixed reception from governments around the globe.

While in some countries they are legal as a means of payment, in others they have no legal status yet or even got banned.

Many experts claim that such currencies as Bitcoin pose threat to the global economy, as they simply cannot be controlled by governments.

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