Venezuela, sanctioned by the U.S. and excluded from the dollar system, turns to USDT.
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Venezuela, sanctioned by the U.S. and excluded from the dollar system, turns to USDT.
Venezuela, sanctioned by the United States and excluded from the U.S. dollar system, has shifted to using Tether to settle 80% of its oil revenue.
Navigating Web3 tides with focused insightsAuthor: Blockworks
Translated by: TechFlow
TechFlow Intro: Venezuela’s case is the most compelling real-world illustration of stablecoins—not because it chose crypto, but because it had no alternative. This article traces the full path a sovereign state has taken under sanctions pressure to adopt USDT, while also revealing the real-world limitations of stablecoins in large-scale money laundering scenarios.
"I don’t think this is bad—the so-called 'dollarization' process… thank God it exists."
— Nicolás Maduro
A recent New York Times report declared Venezuela “the first country to manage a substantial portion of its fiscal revenue using cryptocurrency.”
But this was not a voluntary choice.
About half of Venezuela’s revenue comes from oil sales priced in U.S. dollars. As a sanctioned country, Venezuela cannot legally receive or send U.S. dollars.
Previously, sanctioned governments typically converted oil into dollars through networks of shell companies and offshore banks—or exchanged oil for goods or infrastructure investments.
Now, they have a simpler option: accepting payment in stablecoins. Economist Asdrúbal Oliveros estimates that Tether’s USDT serves as the transaction medium for roughly 80% of Venezuela’s oil sales.
The Venezuelan government once banned stablecoin transactions, viewing them as a threat to the bolívar. But the devastating impact of U.S. sanctions left it with almost no alternative—ultimately forcing it to embrace stablecoins.
Last August, Venezuela’s current interim president, Delcy Rodríguez, acknowledged that crypto-driven dollarization was inevitable. She told business leaders at the time that the government was implementing “non-traditional management mechanisms” to better control the bolívar’s exchange rate.
Shortly thereafter, Reuters reported: “Since June, the Venezuelan government has allowed broader use of USDT.” With official approval, banks now sell USDT—obtained from oil revenues—to domestic businesses, which then use those USDT to pay suppliers both domestically and abroad.
They also hope stablecoins will circulate at the retail level: the head of Venezuela’s National Supermarket Association recently stated on national television that grocery stores are upgrading their systems to accept USDT payments.
In other words, the Venezuelan government is actively encouraging the use of Tether-issued U.S. dollars to replace its own currency, the bolívar.
As a result, USDT—widely referred to by Venezuelans as the “Binance dollar”—is now used for everything “from buying groceries and paying apartment maintenance fees to disbursing salaries and settling supplier invoices.”
So for someone like me—a stablecoin enthusiast—it’s genuinely disappointing that U.S. prosecutors’ indictment against Nicolás Maduro makes no mention whatsoever of cryptocurrency or stablecoins.
The indictment describes illicit financial flows following well-worn paths: planes returning from Mexico “loaded with drug proceeds”; weapons such as grenades exchanged directly for cocaine; protection payments made by allocating shares of cocaine shipments en route; and a $2.5 million cash bribe.
Why no mention of cryptocurrency?
There are two possibilities: (1) The U.S. government has stopped publicly criticizing crypto, and prosecutors know when to omit it; or (2) cryptocurrency and stablecoins remain inadequate for the scale of funds required by Maduro and his associates. The former is more intriguing—but the latter is likely closer to the truth.
“States struggle to quickly liquidate these (crypto) assets,” explains Asdrúbal Oliveros, “because moving crypto requires navigating various controls—controls that are currently unmet.”
A TRM Labs report reaches a similar conclusion: “Large-scale drug trafficking organizations still rely heavily on physical cash, trade-based money laundering, and protection from state or quasi-state institutions when moving core proceeds. Cryptocurrencies typically play only a secondary or supplementary role—not a replacement for these mechanisms.”
Analysts at Lawfare, a national security think tank, agree: “Cryptocurrency-based sanctions evasion remains a drop in the bucket compared to traditional illicit financial channels.”
Others are more optimistic about the practical utility of stablecoins and crypto in “international payments.”
For instance, InSight Crime reports that Mexican drug cartels are sustained by an “industrial-scale crypto money laundering pipeline” that routes illicit funds through digital networks to Chinese chemical suppliers.
It details a niche market stablecoins have found: acting as intermediaries between Chinese financial brokers—who need dollars to sell to clients circumventing China’s capital controls—and Mexican cartels needing to purchase fentanyl precursor chemicals from China.
This isn’t the product-market fit crypto enthusiasts envisioned—but behaviorally, it’s remarkably robust. For example, the DEA states that seizures of illicit cash have dropped significantly, as criminal groups shift “cryptocurrency above traditional cash-based money laundering schemes.”
Correspondingly, seizures of “virtual currency” have surged: Between 2020 and 2024, the DEA seized $2.5 billion in cryptocurrency—compared to just $2.2 billion in cash.
This may explain why Maduro and his associates continue relying on more traditional payment methods: traceable cryptocurrencies and freezeable stablecoins are not yet ready to handle the largest-scale money laundering demands.
Nonetheless, Venezuela’s embrace of digital dollars is setting a precedent. Lawfare sums it up: “U.S. adversaries have established a working proof-of-concept—and emerging financial technologies may further entrench it.”
If so, the U.S. dollar itself may be further strengthened as a result.
Being barred from using the U.S. dollar did not drive Venezuela toward renminbi-denominated oil settlements—instead, it pushed the government toward digital dollars.
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