Venezuela’s National Constituent Assembly has finally given the go-ahead to the country’s oil-backed cryptocurrency, El Petro, after initially declaring it unconstitutional. According to a statement by Vice President Tareck El Assaimi, the decree passed by the establishment will “establish the basis for the management of these alternative mechanisms in financial and commercial activities.”

The El Petro was first offered in pre-sale in February, and following the launch President Nicolas Maduro said proceeds had reached US$735 million. The actual sale of the cryptocurrency began a month later, and Maduro claims this has raised US$5 billion to date. There is no evidence of these proceeds yet. The cryptocurrency is backed by 5 billion barrels in oil reserves from the Ayacucho bloc 2 in the Orinoko belt.

The Petro, which Venezuela touts as the first cryptocurrency issued by a country, is promoted as a means to “boost monetary sovereignty”, while many analysts think it is just a desperate attempt to skirt U.S. financial sanctions. This attempt was doomed, however, as Washington was quick to ban trading in El Petro from the United States.

Analysts think that the Petro won’t bring real benefits either to Venezuela’s ravaged economy or to its people who suffer from shortages of basic necessities amid a hyperinflation expected at 13,000 percent this year by the IMF. Related: China Ups Pressure In Artificial Intelligence Race

Caracas, on the other hand, says it has already begun reaping the benefits of the cryptocurrency. According to Maduro, 30 ambulances for delivery to the Vargas state have been purchased with El Petro.

Earlier this month, the Venezuelan Foreign Ministry also said that Russia was mulling over the use of El Petro for transactions with Venezuela. There is even speculation that Russia played an important role in the launch of the currency as a way of testing the waters for avoiding sanctions through the use of cryptocurrencies.

By Irina Slav for Safehaven.com

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