Hyperinflation, banking breakdowns, and sanctions have driven widespread use of stablecoins and peer-to-peer markets, which now function as essential financial infrastructure for civilians and, in limited cases, for state-linked trade. In this vacuum, digital assets—particularly US dollar-denominated stablecoins—emerged as practical financial infrastructure. For many Venezuelans, crypto is not speculative. It is a way to preserve value, receive remittances, pay for goods and services, and access global commerce when banks are unreliable or unavailable. TRM describes this in a recent report titled, “Understanding Venezuela’s Crypto Landscape Amid Global Tensions,” as the emergence of ‘dual-use crypto rails,’ where the same infrastructure supports everyday civilian economic activity while also resembling alternative payment channels capable of cross-border settlement.
The dual-use rails concept underlines that crypto rails are used for legitimate reasons as well as cross-border settlement. Stablecoins, peer-to-peer markets and informal brokers became central to this system, enabling conversion between cash, bank balances, and digital assets. Over time, these rails became normalized and deeply embedded in daily economic life. US sanctions on Venezuela’s oil sector and state-owned companies severely limited the country’s ability to use the US dollar and the international banking system.
Because the Venezuelan government relies heavily on oil exports for revenue, those restrictions created strong pressure to find other ways to get paid and move money across borders. In that context, public reporting has shown that Venezuela’s state oil sector and related intermediaries began using dollar-denominated stablecoins like USDT for some transactions. In practice, this meant asking buyers to prepay or settle deals using digital dollars rather than traditional bank wires. Stablecoins functioned like cash dollars online, allowing payments to move without passing through banks that might freeze or block sanctioned transactions.
The use of stablecoins appears tied to keeping oil trade and state revenues moving under sanctions, not to the drug-trafficking allegations laid out in the indictment. The narcotics charges focus on cocaine trafficking, protection by state security forces, and the movement of drug proceeds through traditional channels—not on the use of cryptocurrency. The indictment contains no references to cryptocurrency. Venezuela’s earlier experiment with the Petro—a government-linked digital token marketed as an oil-backed alternative to traditional finance—provides additional context. The failure of the Petro did not end Venezuela’s engagement with crypto. Instead, it shifted activity toward market-driven stablecoin adoption at scale. Stablecoins, peer-to-peer markets, and informal brokers became essential infrastructure for ordinary life and, in some cases, for state-linked trade under sanctions pressure.
1. DOES THE SUPERSEDING INDICTMENT ALLEGE THAT NICOLAS MADURO OR HIS ASSOCIATES USED CRYPTOCURRENCY TO TRAFFIC DRUGS OR LAUNDER MONEY? No. 2. IF CRYPTO IS NOT IN THE INDICTMENT, WHY IS IT DISCUSSED IN THIS REPORT? Crypto is discussed to explain the broader financial environment in which Venezuela operates today. 3. HOW DO CARTELS TYPICALLY USE CRYPTOCURRENCY, ACCORDING TO TRM’S RESEARCH? TRM’s analysis shows that cartels generally rely on physical cash, trade-based laundering, and trusted intermediaries for core proceeds. Crypto is usually used in limited or complementary ways—such as payments, short-term value transfer, or hedging—rather than as the primary method for laundering large-scale drug profits. 4. WHAT IS MEANT BY ‘DUAL-USE CRYPTO RAILS’ IN THE VENEZUELA CONTEXT? ‘Dual-use crypto rails’ refers to financial infrastructure that supports legitimate civilian activity—like remittances, savings, and commerce—while also functioning as an alternative payment channel capable of cross-border settlement. 5. WHAT SHOULD POLICYMAKERS AND INVESTIGATORS FOCUS ON GOING FORWARD? The key focus should be on financial networks, proceeds, and conversion points—both traditional and digital. While this indictment is grounded in conventional money movement, Venezuela’s evolving financial ecosystem means future cases may involve a mix of state protection, informal finance, and alternative payment rails. Understanding how these systems intersect is critical for sanctions enforcement and illicit finance prevention.
Venezuela’s Dual-Use Crypto Rails Under Sanctions Hyperinflation, banking breakdowns, and US sanctions have driven widespread use of stablecoins and peer-to-peer markets, now functioning as essential financial infrastructure for civilians and limited state-linked trade. In this environment, dollar-denominated stablecoins have emerged as practical tools for preserving value, receiving remittances, paying for goods, and maintaining access to global commerce when banks are unreliable or blocked. TRM describes this shift as ‘dual-use crypto rails,’ where the same infrastructure supports everyday civilian activity while resembling an alternative cross-border settlement channel. Stablecoins, informal brokers, and peer-to-peer markets became central to converting between cash, bank balances, and digital assets, gradually becoming normalized and embedded in daily life and state trade under sanctions pressure. The narcotics charges focus on cocaine trafficking and related dynamics, not on cryptocurrency, and the indictment contains no references to cryptocurrency. Venezuela’s Petro experiment—an oil-backed digital token—ultimately gave way to market-driven stablecoin adoption at scale, highlighting how crypto rails adapt to sanctions and evolving financial networks.
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