How tokenization can be reversed
A new report suggests that tokenized securities provide a low-cost framework for rebuilding the country’s oil sector.
Venezuela consistently ranks among the top countries for crypto adoption globally, according to a Chainalysis report, due to hyperinflation and sanctions that led to the adoption of cryptocurrencies long before the rest of the world.
But one digital asset firm believes it lays the foundation for something big in the Latin American country.
“[Venezuela] “It has significant natural-resource assets, a large diaspora, and a population already familiar with digital assets and stablecoins due to years of economic instability,” said Jesse Knutson, head of operations at Bitfinex Securities. Global Finance. “These factors can support adoption if appropriate legal and regulatory foundations are established.”
political winds changed
Following the apprehension of President Nicolas Maduro by the US military in January, a window may open.
According to a June 11 Bitfinex report, high issuance costs, lengthy processes and layers of arbitration are “hindering the green shoots of recovery” already taking root in Venezuela. And while oil production is set to surpass one million barrels per day in 2025, its highest level in seven years, it is far less than the 3.1 bpd the country produced in the late 1990s. Bridging that gap will require massive foreign capital.
Knutson said a tokenized securities infrastructure could dramatically reduce the cost of attracting investors.
“Tokenization does not remove those challenges, but it does allow the country to set up a more efficient system with less friction, allowing the country to attract foreign capital more cheaply and allowing a broader group of investors to access Venezuela,” he said.
casual time
Years of hyperinflation and economic turmoil have led Venezuelans to adopt cryptocurrencies for payments, savings and remittances at a rate not seen elsewhere in the Western Hemisphere.
A UN report using data from 2021 showed that about 10.3% of Venezuelans – about one in 10 – owned cryptocurrencies. It also warned that cryptocurrencies pose a threat to financial stability.
For example, the Maduro regime circumvented sanctions by leveraging digital assets to facilitate oil transactions. (It’s worth noting that the US alleges “narco terrorism” in its indictment, not crypto-oil entanglement.)
Still, grassroots familiarity with digital assets gives the country an edge, as long as there are “strong institutions, investor protections, disclosure standards, a functioning legal system and reliable market participants,” Knutson said.
El Salvador comparison
Knutson compared it to El Salvador, which challenged the International Monetary Fund when it became the first country in the world to make Bitcoin legal tender.
The adoption of digital assets helped El Salvador attract much-needed foreign investment. “Venezuela can achieve similar success by adopting blockchain technology in a way that provides regulatory clarity to issuers while providing strong investor protections,” Knutson said.
Bitfinex Securities itself operates regulated platforms in both El Salvador and Kazakhstan, with over half a billion dollars of real-world assets – ranging from tokenized treasury bills to community bank loans – currently traded on its platform.
Nevertheless, the company emphasizes that the success of tokenization depends on legal certainty, enforceable property rights, and investor confidence.
“Those basic principles remain important in any jurisdiction,” Knutson said.
Contact the author: anoto@gfmag.com
