Let's rewind to 2025. Walking in downtown Caracas, the capital of Venezuela, it's almost impossible to buy a "premium" bottle of mineral water with the local currency, the Bolivar (VES). The shop assistants simply point to a Binance or USDT payment code (which is a Tron address) at the counter. Locals open their wallets, scan the code, pay, and leave.
After the Petro cryptocurrency officially exited the market in 2024, Venezuela's physical and online transactions quickly became "crypto-dollarized," with stablecoins becoming the norm for every small payment.
Stablecoins fill the fiat currency vacuum
During the presidency of former President Chavez, Venezuela experienced multiple periods of material shortages. After 2005, a severe famine occurred due to insufficient food imports. In the following 10 years, under Maduro's administration, the food shortage rate reached 50% to 80%, and residents even had to hunt in the wild to fill their stomachs.
For years, the official currency has suffered from rampant inflation, making it difficult to afford daily purchases with denominations exceeding ten million. Faced with the ineffectiveness of the national currency, the public has opted for USDT, a stablecoin with relatively controllable volatility. This has truly brought the US dollar into the lives of Venezuelans, as the black market, where food and gasoline are purchased, only accepts this cryptocurrency. In a country with potentially the world's largest oil reserves, gasoline is scarce, and often only one gas station remains operational in the capital.
With the market anticipating that the Trump administration might tighten Western Union payments, USDT is seen as the "last resort" cross-border channel, used for everything from buying hard bread on the black market to purchasing life-saving medicines.
A US research firm found on the streets of Venezuela that many street vendors immediately cash out a small amount of their daily earnings, keeping only enough for working capital, while storing the rest of their stablecoins directly in their mobile wallets.
For them, Bitcoin is a long-term savings asset, while USDT is a subsistence currency.
The PDVSA scandal disrupts policy path.
The government's attitude toward cryptocurrencies took a sharp turn for the worse after the PDVSA-Crypto corruption scandal broke in 2023.
At the time, Venezuelan oil minister Tareck El Aissami and regulatory officials used USDT to receive up to $20 billion in state-owned oil sales revenue, which did not enter the national treasury. All that remained were a set of seed phrase, but these private keys were also missing, which enraged President Maduro.
In January 2024, the Venezuelan government immediately announced the termination of the Petro cryptocurrency and militarized the shutdown of cryptocurrency mining farms nationwide under the pretext of "stabilizing the power grid," confiscating tens of thousands of devices. Overnight, what was once touted as the world's lowest-cost mining nation became a high-risk no-go zone.
However, Venezuela's official hardline stance has not extended to the country's operations. In an effort to circumvent sanctions escalated by the Trump administration in 2025, the state-owned oil company PDVSA has instead forced its export partners to pay in USDT in export contracts.
The policy logic is completely flawed: while private mining has become a crime, state-owned on-chain dollars are seen as a lifeline.
Public pressure, government embraces on-chain US dollar
Venezuela's current financial system consists of two parallel lines. The first is the ecosystem of stablecoins used by the public, where Venezuelans can quickly split USDT remitted from overseas relatives and friends into payments for children's tuition, medical care, and food.
Street vendors also use encrypted wallets to maintain the stability of their assets.
The second is the on-chain dollar transactions between the government and state-owned enterprises in large-scale oil deals. These transactions cross the radar of US regulators, significantly diminishing the effectiveness of sanctions.
This phenomenon reflects the essence of blockchain currency: it can assist high-ranking officials in transferring huge amounts of assets in the presidential palace, and it can also protect ordinary people from the collapse of purchasing power in their homes.
In Venezuela, the narrative of Bitcoin as "digital gold" has been reinterpreted as a choice of a limited number of financial products that can be purchased.
In the coming months, several indicators in Venezuela warrant attention. If the United States further restricts traditional remittances such as Western Union, the proportion of USDT in remittances may surge, accelerating the process of petrodollarization.
