Venezuela tested keeping cryptocurrencies in the bank

Venezuela’s central bank conducts many tests to see if it can keep cryptocurrencies in the treasury, while Venezuela’s largest oil company wants to pay suppliers with bitcoin and ethereum.

According to Bloomberg, a source said it was an effort at the request of Petroleos de Venezuela (PDVSA), a state-owned oil and natural gas company. PDVSA is seeking to send bitcoin and ethereum to the central bank and wants the monetary authority to pay its suppliers in cryptocurrency.

In addition, Venezuelan central bank members also studied the proposal to allow cryptocurrencies to be included in international reserves. The international reserves of the South American nation are near the lowest level in three decades, at US $ 7.9 billion.

The sanctions imposed by the US on the regime of Venezuelan President Nicolas Maduro largely isolated Venezuela from the international financial system, exacerbating one of the world’s most severe economic crises, forcing gender. The organization must use skillful methods to transfer money.

Continued use of cryptocurrencies after a failed private cryptocurrency launch shows how desperate Venezuela is in finding a way to circumvent sanctions.

It’s unclear why PDVSA owns bitcoin and ethereum, and it’s unclear how much cryptocurrency the company holds. Oil producers have struggled to get customers to pay through regular channels because many large banks are reluctant to do business with a punitive entity.

Last month, the company received most of the $ 700 million payment in yuan after parties had difficulty finding financial institutions to facilitate transactions.

PDVSA may be hesitant to sell the cryptocurrencies they currently have on the open market as this requires businesses to register with an exchange and be tested. Therefore, it wants the central bank, where officials are less likely to be exposed to potential bans, to use cryptocurrencies to pay debt to the parties it owes.

Bitcoin and ethereum use decentralized, online ledgers called blockchains to verify and record transactions. In some cases, this practice allows for relatively anonymous transfers without intermediaries. Very few banks involve cryptocurrencies because of money laundering regulations and many other legal compliance issues.

As of early morning 27.9, the price of bitcoin was 7,960 USD while ethereum reached 160.5 USD, according to Coinmarketcap.

For Venezuela, in order to protect itself from sanctions, the government considers switching to Russia’s international payment messaging system, created to replace the Inter-bank Telecommunications Association and the national finance. (SWIFT) that most financial institutions are using.

Chinese Stocks Fell The Worst in 2018

According to Bloomberg, the Shanghai Composite Index has dropped by nearly 25% compared to the beginning of the year, making China a big stock market with the strongest decline in the world 2018.

The booming trade war between the US and China is seen as the main reason why Chinese stocks “evaporate” $ 2.3 trillion worth of capitalization this year.

Along with that, the debt reduction campaign in the economy pursued by Beijing has caused the debt margin on the stock market to fall to about one third compared to the peak in 2015.

Foreign investors continue to buy listed shares in the mainland China market through connection with Hong Kong stock, and Chinese state funds are supposed to intervene in the market to support prices. share. However, the indexes of Chinese stocks have continuously dropped sharply.

In addition to the US-China trade war, Chinese securities investors are also concerned about the slowdown of the domestic economy.

The $ 2.3 trillion capitalization decline of Chinese stocks this year was the strongest since Bloomberg began saving data on this market in 2002. The similar near capitalization of Chinese securities occurred. came into the global financial crisis 10 years ago, when the Shanghai Composite Index dropped 65%.

With the decrease in capitalization, China this year ceded the position of the second largest stock market in the world to Japan.

Along with the decline of the market is the decline of trading volume. The daily average trading volume of the Shanghai and Shenzhen exchanges combined has dropped to about 369 billion yuan, equivalent to $ 54 billion, the lowest level since 2014.

In Thursday’s session, only about 263.8 billion yuan of votes were transferred on both exchanges, about one-tenth of the peak in 2015.

China’s debt reduction campaign has achieved some results, at least in the stock market because of speculative activity.

The total outstanding securities margin is only about 756 billion Yuan on Tuesday this week, about 1/3 of the peak 3 years ago. In 2015, Chinese securities investors borrowed collateral at a record level to buy stocks, leading to a stock bubble.

Many loss investors have fled the Chinese stock market this year. A total of 75 mutual funds with a focus on Chinese securities dissolved in the year, according to Bloomberg data, the highest level ever since the data began to be recorded in 2007. Over the past 11 years , there are 88 Chinese securities mutual funds come to the dissolution outcome.