Cryptos are moving sharply lower in response to news that President Trump has issued an executive order banning the U.S. purchases of the “Petro”, the cryptocurrency which was infamously rolled out by the Venezuelan government; the order comes as part of a campaign to put more pressure on the government of President Nicolas Maduro.
So why was the executive order bizarre?
Because, in what one hopes was just a grammatical oversight, the subject of the email sent out to the media notifying of the cryptocurrency ban, was that it is an “Executive Order on Taking Additional Steps To Address the Situation In America.” Only after reading the actual email was it revealed that the EO actually refers to Venezuela, prompting some commentators to note that “Trump hasn’t yet succeeded in turning America into Venezuela.”
The Trump White House cannot even type correctly. This is called an Exec Order on “the situation in America.” So I opened it thinking “what kinda ‘situation’ is he talking about?” Turns out its an EO about Venezuela. Trump hasn’t yet succeeded in turning America into Venezuela. pic.twitter.com/sHDfTOcfqf
— Neal Katyal (@neal_katyal) March 19, 2018
The full executive order can be found at the following link, and is summarized as follows in Trump’s letter to Congress:
TO THE CONGRESS OF THE UNITED STATES:
Pursuant to the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701 et seq.), I hereby report that I have signed an Executive Order with respect to Venezuela that takes additional steps with respect to the national emergency declared in Executive Order 13692 of March 8, 2015, and relied upon for additional steps taken in Executive Order 13808 of August 24, 2017. The Executive Order prohibits, as of its effective date, all transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018.
I have authorized the Secretary of the Treasury, in consultation with the Secretary of State, to take such actions, including promulgating rules and regulations and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of the Executive Order.
I am enclosing a copy of the Executive Order I have issued.
Donald J. Trump
As a reminder, one month ago Venezuela President Nicolas Maduro announced that the launch of his country’s oil-backed answer to Bitcoin, Petro, raised $735 million in its first day, despite warnings by the Treasury Department that investors should stay away.
In a tweet in February, the Venezuelan leader said that investors had promised 4.8 billion yuan, or $735 million in a pre-sale of Petro, the cryptocurrency Maduro hopes will help boost Venezuela’s ailing economy. Maduro has said that he hopes the Petro will help the country skirt Western sanctions, though the U.S. Treasury has warned that it won’t be that easy. In mid-January, the department told potential Petro investors that they could be subject to sanctions against Venezuela.
“Available information indicates that, once issued, the Petro digital currency would appear to be an extension of credit to the Venezuelan government,” the Treasury department said in a statement to Reuters.
And now, the US is escalating, with Bloomberg reporting first that Trump issued the order on Monday prohibiting U.S. citizens from engaging in transactions using the oil-backed cryptocurrency. He authorized Treasury Secretary Steven Mnuchin to issue any necessary regulations to enforce his order.
And while the EO has nothing to do with bitcoin or any other cryptocurrencies, and certainly nothing to do with the US, the entire crypto sector instantly dropped by 3-5%, perhaps on concerns that any other cryptocurrency could just as easily fall in Trump’s sights next.