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Banking Shut Down Drives Crypto Adoption Among Venezuelans

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The indefinite suspension of Venezuela's national banking system is driving further adoption of cryptocurrencies.

Peer-to-peer Bitcoin (BTC) trading has surged in Venezuela after shutting banks amid a nationwide quarantine to fight the spread of coronavirus.

On March 17, Venezuelan President Nicolas Maduro brought a country-wide quarantine to slow the spread of COVID-19. With only 33 cases of coronavirus confirmed so far, the administration hopes that the emergency measures will prevent its health system from becoming overwhelmed by a rapid increase in infections.

Venezuela’s banking sector shut down indefinitely

Venezuela’s national banking system has been halted “indefinitely” as part of the sudden quarantine, sparking an increase in P2P cryptocurrency trading. After a three week skid in weekly volume, Localbitcoins trade activity between BTC and the bolivar has rebounded back above $3.4 million for the past two weeks.

The economic ramifications of the coronavirus appear to be driving cryptocurrency adoption across the South American continent, with Localbitcoins volume jumping over 30% in Peru and increasing nearly 15% in Colombia over the past week. Both Peru and Colombia have closed their borders in recent days.

Coronavirus pandemic overshadows Petro initiatives

The COVID-19 threat appears to have dampened Venezuelan efforts to force adoption of its oil-backed cryptocurrency, the Petro.

Maduro’s last major initiatives to drive Petro use appear to have taken place in January, with the president announcing the launch of a Petro-powered casino from which the profits will purportedly fund health and education programs. The casino was launched approximately one week after Maduro decreed that all airline fuel sales for international flights be conducted using the Petro.

Despite Maduro’s efforts to stimulate its adoption, Venezuelans have not warmed to the Petro. Localbitcoins listings have shown Venezuelans to be offloading the tokens at half of their supposedly fixed value of $60.

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