Venezuela caught the world by surprise with the recent Bitcoin trading volume experienced by the country. Venezuela’s national currency, the Bolivar, has suffered hyperinflation, sending its citizens scrambling for alternative currencies. Bitcoin has always been a viable option, but the volume experienced recently in Venezuela puts the country right next to the US in trade volume on the LocalBitcoin exchange.
The volume of Bitcoin trading in Venezuela on LocalBitcoins can be seen in the chart below. The country now records trades well over 1.8k bitcoins in a week.
The Venezuelan government in their bid to sustain economic power and control created the Petro cryptocurrency. However, there is little evidence of the cryptocurrency being actually used for transactions. Instead, Venezuelans have embraced Bitcoins over the local currency and the Petro.
This sudden surge in the LocalBitcoins trade volume is likely due to the recent restriction placed on crypto remittances in the country by the government.
On February 7, the government published a decree that affects all crypto transactions. The restriction includes monthly limits and fees applying to both individuals and legal entities. The fee ranges from a minimum of about $0.28 and a maximum of 15% for every crypto transaction.
The monthly limit is capped at 10 Petro, which is currently equivalent to about $600. Any transaction above that amount will need approval from the regulatory body. However, the amount must not surpass 50 Petro (which is equivalent to $3,000).
This triggered the move to the LocalBitcoins exchange which specializes in peer-to-peer, over-the-counter (OTC) trades. This involves bringing together buyers and sellers to trade based on the terms they both agree with. In this way, Venezuelans might be able to find a way around the inconvenient terms set by the government.
It is yet uncertain how the government intends to monitor the crypto transactions.
The government can get the crypto trading data of the citizens from exchanges that act as custodians. However, LocalBitcoins is a peer-to-peer trading platform so there’s no way the government can get their trading information to enforce the law even if the exchange wants to be compliant.
Bitcoin has become an important aspect of Venezuelans’ economic life since the recent economic downturn of their country began in 2015.
The trust in the cryptocurrency by the citizens of the country can be summed up in the tweet below by Kevin Rooke. He compared the volume of trade in Bitcoin to the Venezuelan stock exchange. While Bitcoin recorded a trading volume of $1.2M in the second week of February 2019, the stock exchange recorded $8,117 in the same period.
Venezuela's P2P Bitcoin market does 157x the volume of their largest stock exchange.
Venezuela's top stock exchange did $8,117 of trading volume on Friday.
Not a typo. $8,117 USD.
Venezuelans traded an avg of $1.28M of Bitcoin on LocalBitcoins each day this week. pic.twitter.com/Uu4Ed2B9V3
— Kevin Rooke (@kerooke) February 11, 2019
Do you think Venezuelans will keep up this trade volume over the coming months? Let us know in the comments section.