Original author: Byron Gilliam
Original translation by: Saoirse, Foresight News
Editor's Note : Venezuela is the first country to entrust most of its financial affairs to cryptocurrency management. Due to US sanctions, approximately 80% of its oil sales are transacted in USDT, and USDT has already penetrated multiple financial sectors, including retail. While other countries have explored cryptocurrency applications—El Salvador made Bitcoin legal tender in 2021, and Bhutan launched a national-level encrypted payment system for tourists in 2025—neither of them addressed the core area of "most financial affairs." What are the underlying logic and challenges behind Venezuela's unique practice? This article will provide an in-depth analysis.
Venezuelan President Nicolás Maduro | Image credit: StringerAL/Shutterstock and Adobe, modified by Blockworks
"I don't think what they call the 'dollarization' process is a bad thing... Thank goodness, this process does exist."
—Nicolás Maduro, President of Venezuela
The New York Times recently reported that Venezuela has become "the first country to entrust a large part of its financial affairs to cryptocurrency management."
But this was not a voluntary choice.
About half of Venezuela's fiscal revenue comes from oil sales denominated in US dollars, but as a sanctioned country, it cannot legally send or receive US dollars.
In the past, governments of sanctioned countries would use intricate networks of shell companies and offshore banking systems to settle oil transactions in US dollars, or barter oil for goods or infrastructure investments.
Now, they have an even simpler option: accepting stablecoin payments. Economist Asdrúbal Oliveros estimates that Tether's USDT stablecoin has become the medium of exchange for approximately 80% of Venezuela's oil sales.
The Venezuelan government had previously banned stablecoin trading, arguing that it posed a threat to the country's currency, the bolivar. However, the heavy blow from US sanctions left the country with no choice but to accept stablecoins.
Venezuelan Vice President Delcy Rodriguez recognized as early as August last year that the dollarization driven by cryptocurrencies was an inevitable trend. At the time, she told business leaders that the government was implementing "unconventional management mechanisms" to better regulate the bolivar exchange rate.
Reuters later reported that "Since June of this year, the Venezuelan government has allowed the expansion of the use of USDT." With state approval, banks are now selling USDT from oil sales to local companies, which then use the USDT to pay domestic and foreign suppliers.
The Venezuelan government also hopes that stablecoins can circulate in the retail sector: the head of the country's National Supermarket Association recently told state television that grocery stores are working on building systems to support USDT payments.
In other words, the Venezuelan government is encouraging its citizens to use the "dollars" issued by TEDA instead of the domestically issued bolivars.
Therefore, as a stablecoin supporter, I am disappointed that cryptocurrencies (including stablecoins) are not mentioned at all in the US government's indictment of Nicolás Maduro.
Conversely, the methods of illicit financial transactions described by prosecutors in the indictment remain quite traditional: planes returning from Mexico "fully loaded with proceeds from drug transactions," cocaine exchanged for weapons such as grenades and rocket launchers, "protection money" paid for a portion of the transported cocaine, and a $2.5 million cash bribe.
Why is cryptocurrency not mentioned at all?
There are two possible reasons: 1) The US government no longer makes negative comments about cryptocurrencies, so prosecutors are deliberately avoiding the topic; 2) The scale of funds available for cryptocurrencies (and stablecoins) is not yet sufficient to meet the needs of Maduro and its affiliates.
While the first explanation is more interesting, the second possibility is clearly greater.
Asdrúbal Oliveros explained, "The Venezuelan government is finding it difficult to quickly liquidate these (crypto) assets because transferring crypto funds requires going through multiple control processes, and the requirements of these processes are currently not met."
A report by TRM Labs reached a similar conclusion: "Large trafficking organizations still rely heavily on physical cash, trade-based money laundering, and state/quasi-state protection when transferring core illicit proceeds; cryptocurrencies typically play only a supplementary or auxiliary role and cannot replace these traditional methods."
A national security analyst at Lawfare magazine agrees: "The scale of using cryptocurrencies to circumvent sanctions is still negligible compared to traditional illicit financial channels."
However, some are more optimistic about the role of stablecoins and cryptocurrencies in the field of "international payments".
For example, InSight Crime reported that Mexican drug cartels are relying on an "industrial-scale cryptocurrency money laundering network" to operate—a network that uses digital channels to transfer illicit funds to Chinese chemical suppliers.
The report details that stablecoins have found specific application scenarios between two groups: Chinese currency brokers who need to sell US dollars to clients who circumvent China's capital controls, and Mexican drug cartels that need to purchase fentanyl raw materials from China.
While this may not be the "product-market fit" that cryptocurrency proponents hoped for, real-world application shows that stablecoins are highly influential in such scenarios. For example, the U.S. Drug Enforcement Administration (DEA) stated that the amount of illicit cash seized by the agency has decreased significantly because criminal groups are "prioritizing cryptocurrencies over traditional cash laundering methods."
Correspondingly, the scale of "virtual currency" seizures has increased significantly: from 2020 to 2024, the DEA seized a total of $2.5 billion in cryptocurrencies, exceeding the $2.2 billion in cash seized during the same period.
This may explain why Maduro and its affiliates still insist on using traditional payment methods—traceable cryptocurrencies and freezeable stablecoins—which have not yet met the needs of large-scale money laundering.
Nevertheless, Venezuela's adoption of the digital dollar remains groundbreaking. Lawfare concludes: "America's adversaries have established workable proofs of concept, and emerging financial technologies are likely to further solidify this model."
If this is indeed the case, it may further solidify the dollar's position.
The ban on using the traditional US dollar did not force Venezuela to choose currencies such as the yuan for oil settlements—the government simply switched to using the digital dollar.
