Fluctuating local currencies and geopolitical instability are pushing Venezuelans and their government towards stablecoins like USDT, according to new reports.

Venezuelans are increasingly looking towards stablecoins linked to safe global currencies, like USDT, to protect their savings from the hyperinflation, set to rise to 270% by the end of 2025, currently affecting the Venezuelan bolivar. Venezuela ranks fourth in Latin America (LatAm) by value of cryptocurrency received, ahead of bigger countries like Peru and Colombia, according to a Chainalysis report published earlier this month. 

Domestic and geopolitical uncertainty are also encouraging many to turn to stablecoins; recent Nobel Peace laureate and opposition leader Maria Corina Machado, for example, has called cryptocurrency a “lifeline” and a “vital means of resistance” for Venezuelans. Machado and her campaign use cryptocurrencies to protect assets from government seizure, and she has vowed to make Bitcoin an integral part of the country’s national reserves if elected. 

Stablecoins help Venezuelans bypass government-imposed exchange rates, which do not keep up with the real levels of inflation and thus make it almost impossible for ordinary people to access foreign currencies. 

The domestic and the international

Tensions are mounting between the US and Venezuela; just last week, the US military bombed a Venezuelan ship, which they claimed was carrying drugs. These fraught relations are further restricting Venezuelan access to the dollar. USDT, on the other hand, is not affected by the sanctions and restrictions, leading to growing interest in the digital asset. 

The Venezuelan government itself, in the face of economic issues, has started using cryptocurrency to halt a recession. Before the tensions with the US, most of Venezuela’s foreign reserves came from its sales of crude oil through Chevron, the American energy giant, which paid the country’s producers in dollars; banks then recirculated the currency through the economy, enabling firms to pay for imports. 

However, in February, the Trump administration revoked Chevron’s permission to sell Venezuelan oil, drying up the country’s largest source of foreign currency. This comes amid increasing tensions between the two countries, which most recently have led to a buildup of US warships off the coast of Venezuela.

To cope with the US Chevron ban, Venezuela’s government has been selling oil – the country’s main natural resource – to China in exchange for cryptocurrency. This then funnels to the national economy through authorised crypto exchanges. Nearly half of the currency entering Venezuela legally is in the form of dollar-linked stablecoins thanks to the new system, the New York Times reports.