The U.S. Treasury Department is concerned about Venezuela’s new “petro” cryptocurrency and is warning investors to steer clear or face unspecified consequences.
The U.S. Treasury said Tuesday that Venezuela’s petro could put U.S. citizens at “legal risk” because investing in the cryptocurrency potentially conflicts with U.S. sanctions against the South American country, according to a Reuters report.
“Available information indicates that, once issued, the petro digital currency would appear to be an extension of credit to the Venezuelan government,” the Treasury department said in a statement.
Venezuelan President Nicolas Maduro said in December that Venezuela would create its own Bitcoin-like cryptocurrency to “defeat the financial blockade and move toward new forms of international financing for the economic and social development of the country.”
Declining oil revenue and the declining value of Venezuala’s bolivar currency has contributed to the country’s economic crisis, with starvation on the rise and reports that the nation’s hospitals lack the appropriate supplies to care for the increasingly ill.
Economists and analysts have argued that the market for cyrptocurrencies is experiencing a bubble, with companies like Kodak debuting their own cryptocurrency as a sign of the hysteria.
The popular Bitcoin cyrptocurrency declined 15% over a 24-hour period to $11,750, as of this morning. Additionally, the digital tokens associated with Ethereum fell 21% to $1,046 while Ripple’s XRP cryptocurrency dropped 29% to $1.30.