Venezuelans Can Now Buy Crypto With State Stimulus Checks

In brief

  • Venezuela’s largest bank has teamed up with crypto financial services startup Glufco.
  • The partnership enables the purchase of dollar-pegged stablecoins through the state’s biometric payment system, Biopago.
  • It could prove to be a useful onramp for other crypto purchases.

In Venezuela, citizens will soon be able to buy cryptocurrency directly from state welfare accounts.

Thanks to a collaboration between the nation’s largest, state-owned bank and financial services startup Glufco, Venezuelans can now purchase Glufco’s dollar-pegged stablecoin through the same infrastructure that powers the country’s biometric payment system, Biopago, using funds distributed by the state. 

The Biopago platform plays a vital role in Venezuela’s financial landscape. The Venezuelan government uses it as a bridge between the Bank of Venezuela and the country’s Patria system, which it uses to distribute bonds, manage remittances (including those made with cryptocurrency), and dole out state relief funds (similar to stimulus checks).

Now, Venezuelans can take those state relief checks and immediately exchange the funds for Glufco tokens, which are pegged to the US dollar. What it means is two-fold: first, it provides Venezuelans with yet another way to access dollars and protect themselves against the hyperinflation that the national currency, the bolivar, continues to suffer. And second, it gives residents of Venezuela a new on-ramp to crypto.

Citizens who make use of the Glufco integration can now acquire those dollar-pegged stablecoins quickly and easily, and then “subsequently trade them on another exchange for other cryptos,” such as Bitcoin, Litecoin, Dogecoin and Tether (USDT), Glufco COO Antonio Di Caprio told Decrypt.

But why would they?

Venezuela: financial crisis and Bitcoin adoption

It’s no secret that Venezuela’s financial situation is a mess. A mix of internal corruption and international sanctions have led the country to reach extreme levels of inflation, currency devaluation, and economic recession. One way citizens have sought to escape this is by ditching bolivars and buying up dollars, which up until very recently was technically illegal and purposely very difficult.

Another way has been through cryptocurrency, such as Bitcoin. According to a report from blockchain analytics firm Chainalysis last year, Venezuela ranks third among all countries in terms of crypto adoption. And it’s peer-to-peer Bitcoin trading scene is one of the most active in the world.

Top 10 countries with most crypto adoption. Image: Chainalysis
Top 10 countries with the most crypto adoption. Image: Chainalysis

The government of Nicolas Maduro, however, appears to have recently (and finally) accepted the fact that currency controls have only worsened the crisis and have decided to open up the country to some level of dollarization—that is, allowing for the US dollar to be used as the de facto currency of the nation.

Aside from lifting currency controls, Maduro’s government has also allowed for the opening of Venezuelan bank accounts with dollars. Given these recent policy changes, Venezuela’s central bank now teaming up with a crypto firm to make it easier for citizens to access dollar-pegged stablecoins appears to make sense.

The idea, it seems, is to allow them to protect themselves from both currency inflation and, potentially, Bitcoin volatility. After all, in a country where the minimum wage is less than $10, even the smallest fluctuation can have a dire impact on the most vulnerable population. Dollars (physical or digital) may offer the stability that many within the country seek.

Glufco growing

Glufco’s stablecoin can currently be traded on small international exchanges, such as Waves, Graviex, and Vindax. There is also an OTC desk on the state-registered Criptolago exchange, where the stablecoin can be swapped for Bitcoin or bolivars.

Di Caprio also explained that Glufco’s OTC platform will also accept bolivars, Chilean pesos, Peruvian soles, and US dollars. It also supports payments using Zelle—a very popular platform within Venezuela—and a variety of stablecoins.

Screenshot of the new Payment System developed by Glufco and Banco de Venezuela
Screenshot of the new payment system developed by Glufco and Banco de Venezuela. Image: Glufco

The Glufco COO also noted that the Bank of Venezuela played a vital role in the development of this latest platform. The Bank did not respond to Decrypt’s request for comment.

Since first launching it’s “all-in-one” crypto platform (which included a digital wallet, payment gateway, and crypto exchange), Glufco has since rolled out crypto payments via SMS text message and payroll capabilities. It plans to release its point-of-sale terminals for in-person crypto purchases within the next two weeks.


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HWI And Hardware Wallet Integration In Bitcoin Core

In this episode of “The Van Wirdum Sjorsnado,” hosts Aaron van Wirdum and Sjors Provoost discussed hardware wallet integration into Bitcoin Core, one of the ongoing projects that Provoost regularly contributes to himself.

Hardware wallets are a popular solution for storing private keys offline, to minimize the risk that hackers gain access to the corresponding coins. They are used in combination with regular software wallets to sign transactions in such a way that the private keys never leave the device.

The Bitcoin Core project has been working toward hardware wallet integration as well, which would offer users the safety of storing private keys on an offline device in combination with the security of a full node. A key part of this project is the Hardware Wallet Interface (HWI), a Bitcoin Core-compatible program designed to communicate with a range of hardware wallets.

Provoost explained how Bitcoin Core and HWI are slowly getting more closely integrated. Until now, HWI could already be used in combination with Bitcoin Core by having users copy/paste data between the two programs. This will now be automated in the next Bitcoin Core release, at least for command line users. The next step will be to also use hardware wallets from Bitcoin Core’s graphical user interface.

Finally, the hosts discussed some alternative solutions to use hardware wallets in combination with full node security, like the Specter wallet.


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Price analysis 3/5: BTC, ETH, ADA, BNB, DOT, XRP, UNI, LTC, LINK, BCH

Analysts expect the U.S. economy to stage a strong recovery in the second half of this year as coronavirus vaccines are distributed and economic activity begins to increase. As growth picks up, inflation concerns are also on the rise. Speculation is rife that the U.S. Federal Reserve may have to adjust its dovish stance to hold down interest rates. 

In anticipation, the 10-year U.S. Treasury yield has jumped from about 1% at the start of the year to 1.626%. This has resulted in profit-booking in assets considered as risky and as equities pullback, a temporary pause may be put on Bitcoin’s (BTC) rally.

Daily cryptocurrency market performance. Source: Coin360

The drop in investor sentiment has also hurt the stock prices of MicroStrategy and Tesla who have each invested in Bitcoin recently. MicroStrategy’s stock price has plunged by over 50% from its all-time high at $1,315, even though the price of Bitcoin is currently only down about 20% from its all-time high.

Tesla, which had announced a $1.5 billion Bitcoin position on Feb. 8 has also seen its stock price plummet by over 34%. To stem the decline, longtime Tesla analyst Gary Black has suggested the electric car maker dump its Bitcoin holdings and instead use the proceeds for a stock buyback.

Let’s analyze the charts of the top-10 cryptocurrencies to spot the critical support levels where buyers may step in and arrest the current decline.