Caracas – The Venezuelan government’s new round of arrests against foreign exchange information administrators on social media is prompting people to accelerate their shift to stablecoins to avoid capital control risks. Local analysis shows that the trading volume of dollar-pegged stablecoins soared by 370% last week, reaching a new high since the 2023 cryptocurrency ban.
Regulatory suppression has triggered a sharp increase in demand for stablecoins
Venezuela’s National Intelligence Service (SEBIN) arrested three administrators of Instagram foreign exchange rate accounts on June 3rd, accusing them of “spreading illegal financial information”. These accounts once provided the public with the black market exchange rate of the US dollar against the Bolivar, and the difference between the official exchange rate and the black market has long remained above 1:1000.
“The arrest operation has wiped out the last batch of private exchange rate information sources,” said Maria Rodriguez, the operations director of LocalBTCV, a cryptocurrency exchange in Caracas. “Now people can only hedge against the depreciation risk of Bolivars through stablecoins such as USDT.” Blockchain data shows that the on-chain transfer volume of USDT in Venezuela has jumped from an average of 1.2 million US dollars per day to 5.6 million US dollars, mainly through small transactions on the Tron network.
Stablecoins have become a survival tool for “digital foreign exchange”
In an economic environment with an inflation rate exceeding 1,000%, stablecoins have become the “digital foreign exchange reserves” of Venezuelan families. Luisa Perez, a 27-year-old baker, showed the reporter her mobile phone wallet: “I exchange 30% of my income for USDT every day, and Bolivar’s salary depreciates by half the next day.” This demand has given rise to a localized trading model – street vendors accept USDT payments through QR codes, and supermarkets have begun to mark the stablecoin prices of their goods.
In the local cryptocurrency community, there is a “three-step hedging method” circulating: find over-the-counter dealers through Telegram bots, purchase USDT with bolivars, and store the tokens in wallets that support offline signatures. “We are like conducting a digital version of the ‘underground bank’ transaction,” disclosed anonymous trader “El Satoshi”. “The government has shut down the exchange website, but it couldn’t stop the peer-to-peer transactions.”
The tug-of-war between government regulation and private evasion
This is not the first time Venezuela has taken action against cryptocurrencies. In 2023, the country promulgated the Digital Asset Control Act, prohibiting unauthorized cryptocurrency trading and launched the state-backed Petro. However, official data shows that the actual circulation of Petro is less than 1% of that of stablecoins, and the public trusts assets pegged to the US dollar more.
“The government tried to create fear through arrests, but inflationary pressure made stablecoins a necessity for survival,” analyzed Rafael Toro, a professor of economics at the University of Caracas. “When fiat currency loses its function of storing value, decentralized finance becomes a natural alternative.” At present, the Central Bank of Venezuela has not commented on the surge in stablecoin transactions, but has begun to monitor local address activities on major blockchain networks.
The dual challenges of cross-border transactions and technology adaptation
Although stablecoins offer a safe haven, Venezuelan users still face technical obstacles: 43% of households lack stable Internet access, and some transactions need to be completed offline through methods such as “Bluetooth flash Transfer”. In addition, the sanctions imposed by the United States on Venezuela have led local banks to refuse to process transactions related to cryptocurrencies, forcing traders to rely on cross-border payment channels in Colombia and Brazil.
“We are developing a USDT transfer system based on text messages to enable feature phone users to participate in transactions as well,” the technical team “CryptoVZ” announced on social media. This localized innovation highlights the resilience of stablecoins in a regulated economy – when traditional financial channels are cut off, decentralized networks are becoming the new economic lifeline.
As the panic triggered by the arrest operation persists, the stablecoin craze in Venezuela may just be a microcosm of the widespread use of cryptocurrencies in Latin America. In countries with high inflation such as Argentina and Turkey, a similar “cryptocurrency substitution phenomenon” is also quietly unfolding, providing a special practical sample for global digital currency adoption.
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