Venezuela Bets on De-Dollarization After Foreign Currency and Crypto Tax Is Applied – Emerging Markets Bitcoin News

Venezuela’s government is now trying to make the bolivar the preferred currency for purchasing goods in Venezuela. These might not be the best options for a country like Venezuela, which has recently experienced hyperinflation but still experiences high levels of inflation. This is changing with the introduction of a 3 percent tax to target foreign currency and cryptocurrency transactions.

Venezuela Strives for Strengthening its Fiat Currency

After having defacto dollarization, which the president of the country called an “escape valve” from the economic crisis that Venezuela had faced five years ago, now the country is seeking to establish its fiat currency, the bolivar, as an interesting choice for payments. To aid this end, the IGTF tax, which taxes payments and transactions made in dollars or foreign currency and crypto at 3%, is being introduced.

This might not be the right time to make such changes, as Venezuela just ended a period in hyperinflation, which was combined with the devaluation and redenomination of its fiat currency. Asdrubal Oliveros is a national economist and the manager of Ecoanalitica (a consulting company), declared:

Because the recovery has been very slow and there is chronic inflation (not hyperinflation but persistent inflation), it is risky. It’s very difficult to restore trust in the currency one day after the other.

De-Dollarization in Progress

But, it seems that the tax is having an effect on Venezuelans spending patterns. The bank supervisory has presented numbers that show an increase in the use of national fiat currencies since the tax was introduced and began to be applied. The numbers show that debit payments and digital transactions in local currencies increased by 22% and 21% respectively.

Since 2021, when 75% of purchases were done with Colombian pesos or dollars, the use of the bolivar has steadily increased. Ecoanalitica surveys show that the bolivar, along with other payment options, is more popular than the dollar. It’s now used in only 44.7% commercial transactions. It is partly due to intervention by the central bank to stabilize fiat currency. The dollar’s volatility has stabilized this year.

Let us know your thoughts on the Venezuelan de-dollarization. Leave a comment below.

Sergio Goschenko

Sergio, a Venezuela-based cryptocurrency journalist. His entry into the cryptocurrency world in December 2017 was when it saw a price surge, and he describes himself as being late to this game. His background is in computer engineering, but he also lives in Venezuela and was impacted at the social level by the crypto boom. He offers an alternative perspective on the success of cryptocurrency and the benefits it has for the underbanked.

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