At a time when India’s Central bank RBI is taking all the necessary measures to curb cryptocurrency trading in India, Venezuela – in order to promote its fiat cryptocurrency Petro – has offered India a whopping 30% discount on its crude oil purchases, given that India uses Petro for the payments.
As reported by Inc42, Venezuelan President Nicolas Maduro, in February 2018, had launched a new cryptocurrency called ‘Petro’ to circumvent US-led sanctions. The cryptocurrency is backed by oil and gas reserves to shore up the country’s collapsed economy. The decision has been taken owing to the fact that Venezuelan official currency Bolivar has been on a free fall in recent years. Bolivar, in comparison to the US dollar, has devalued by 5x for the past eight years.
In India, Coinsecure had recently started offering Petro; however, the exchange recently registered a huge theft of $3.5 Mn and has halted its operations since then.
Will India Accept The Offer?
While Nicolas hopes that the new cryptocurrency Petro would help Venezuela advance in issues of monetary sovereignty and make financial transactions to overcome the financial blockade posed by the US-led NATO countries, for India, which is completely dependent upon imports for its crude oil requirements, it could be seen as a mouthwatering offer.
India has not accepted or showed any interest in the offer so far. And, there is very little chance that it will accept it also as Venezuela is currently facing the sanctions, there won’t be any bank guarantee in the bilateral international trade which is usually a necessary measure in such cases.
Also, the US has already banned Petro in its own country.
Initially, Poland apparently had also shown interest in Venezuela’s offer to trade food and medicine in Petro at a discounted price. However, post the US ban, Poland too shied away from the trade, increasing difficulties for President Nicolas.
India trading in Petro will provide certain legitimacy that Venezuela is vouching for. However, trading in Petro will pose certain limitations for India, as Petro is currently accepted in Venezuela only.
However, the question at hand is, will India go against international powers such as the US and EU to trade in Petro, as it did with Iran? As in the case of Iran which is its neighbour country, India has vested interests and the trade between the two countries goes back to centuries and sanctions by the EU and US happened much later.