Venezuela Turns to Crypto as Citizens Battle Inflation and Instability

Key Takeaways

• Venezuelans are increasingly turning to crypto as a hedge against inflation and economic instability.
• Stablecoins have become widely used for everyday transactions and remittances.
• The Venezuelan crypto market saw $20 billion in trading volume in 2024, with a significant portion of transactions involving stablecoins.

Faced with persistent inflation and economic turmoil, and with the local currency, the bolívar, rapidly losing value, many Venezuelans are turning to crypto as a lifeline.

Venezuela’s Growing Underground Crypto Market

According to a report published in local media, many Venezuelans are turning to peer-to-peer (P2P) platforms, such as Binance, to carry out remittance trades and store wealth. These users often operate under pseudonyms, keeping their identities hidden to avoid scrutiny.

A citizen working for a foreign company explained that they get paid in dollars, which they use to buy USDT (Tether) and exchange for bolívars when required instead of converting the entire amount.

“I sell them and receive a deposit in my bank account in Venezuela. It is easy because you do not need to use a money changer. In the app you go to see who is buying and selling and, in less than 15 minutes, you make your transaction and that’s it,” the citizen said.

As a result, despite the government’s lack of regulation and occasional threats, the underground crypto market in Venezuela has flourished in recent years, providing a way for people to access foreign currency and preserve the value of their money.

In 2024, Venezuela’s crypto market saw an impressive $20 billion in trading volume, with the majority of transactions being made through stablecoins.

Stablecoins: A Crucial Financial Tool

Stablecoins have become a popular alternative to the bolívar for Venezuelans looking to preserve their purchasing power.

A report by Chainalysis found that from July 2023 to July 2024, 47% of transactions under $10,000 in Venezuela were conducted using stablecoins.

This surge in stablecoin use is driven by their relative price stability compared to the volatile bolívar, making them an attractive option for saving and transferring money.

For many Venezuelans, stablecoins like USDT have become essential for day-to-day transactions and remittances, offering a safer, more predictable store of value.

Not Its First Rodeo

Venezuela’s embrace of crypto is not entirely new.

In 2019, the country launched the petrodollar , a state-backed cryptocurrency tied to its oil reserves.

However, the initiative was marred by corruption and mismanagement, leading to its rapid demise.

Despite this setback, Venezuela’s continued interest in crypto is a testament to the need for alternative financial solutions in the face of economic collapse.