On September 22, local industry news site CriptoNoticias reported that the government of Venezuela has legalized the crypto mining industry. The decree was published in the Official Gazette on Monday and was authorized by the Head of National Superintendency of Crypto Assets and Related activities (SUNACRIP) Joselit Ramirez.
According to the report, any local entity engaging in cryptocurrency mining must now apply for a license and be listed on a specific government register. Any successful applicants should also provide information about their mining activities and keep their mining-related records for 10 years. Manufacturers of mining equipment and mining data centers will also be able to apply for a special license, with importing of mining equipment being supervised directly by Venezuelan authorities.
In order to keep control over the industry, the government has created an official National Digital Mining Pool, requiring miners to operate within it or face severe penalties. This way, the authorities will centralize all mining in the country and directly regulate any income earned from the pools’ combined rewards along with the payout of contributors. Moreover, at any given moment, the government could now potentially freeze or delay miners’ payments and collect taxes connected to this activity.
After the economy of Venezuela suffered one of the greatest financial crises in its history due to continuous economic mismanagement, its local currency, the Bolivar, is now practically worthless. Millions of households have been deprived of their savings and forced to work in a highly-unstable and risky financial system. Cryptocurrency has become one of the only ways for people to preserve their savings and secure their livelihood.
While the president of Venezuela, Nicolas Maduro, has previously tried to introduce a purportedly oil-pegged crypto token called Petro, the U.S. Department of Justice alleged earlier this year that Maduro had used the cryptocurrency as a cover-up of his illicit drug-running.
The legalization of mining comes as a response to the urgent need of introducing a new form of currency to the depleting economy of Venezuela. And while the decree will surely assist the country in some way considering the status quo, the centralization of mining brings worrying implications to anyone who understand the current situation in the country and socialism in general.