Circle, which along with Coinbase issues the USDC stablecoin, announced today that it has coordinated with the US government and Latin America crypto exchange Airtm to route aid for Venezuelan healthcare workers through the Latin American country's government in exile.
Venezuela actually has two presidents. In one camp, there's Nicolás Maduro, the socialist leader who's been in power since 2013. In the other is Juan Guaidó, leader of the National Assembly, which declared him acting president in January 2019; over 50 other countries recognized him as the legitimate ruler, including the US, which simultaneously slapped sanctions on the Maduro regime.
As a result, Maduro has limited Guaidó's access to cash.
Now, says Circle, it has stepped in so that it can provide funds to Venezuelan healthcare workers as the country has been hit hard by COVID-19.
The system, it said, will work like this:
"The US Treasury and Federal Reserve releases seized funds to the Guaidó government’s account at a US bank. The Guaidó government then uses those funds to mint USDC. The USDC is then sent to Airtm."
Once the USDC stablecoins hit Airtm wallets, they will go to Venezuela healthcare workers in the form of AirUSD, Airtm's own fiat-backed stablecoin. Recipients can then withdraw at banks, send the funds, or spend them online.
According to Circle, this will "bypass the controls imposed by Maduro over the domestic financial system and put millions of dollars of funds into the hands of people fighting for the health and safety of the people of Venezuela."
Alejandro Machado of Open Money Initiative and Valiu told Decrypt, "I think all efforts that end up in more Venezuelans being in greater control of their money are worth it. Helping health workers in particular is one of the best things anyone can do in the middle of a pandemic—most of them earn less than $3 a month."
Not everyone is convinced it's a great idea. Crypto researcher Hasu said, "Both impressive and scary. The US is now officially exporting dollars to third-world countries via crypto rails."
Both impressive and scary. The US is now officially exporting dollars to third-world countries via crypto rails. https://t.co/JNuw3wAzYA
— Hasu (@hasufl) November 20, 2020
The Treasury Department has actually been sending funds to Venezuelan health workers since September—using funds seized from the Maduro government.
But getting funds to Venezuela has been a problem. Though the Trump Administration gave Guaidó control over Venezuelan government assets within the US in 2019, according to National Economic Council Director Larry Kudlow, the US was looking at "banks, iPhones, apps and many clever ways to get cash" to Guaidó.
Now, it looks like the US government may have found a way to feed the opposition funds. But the plan is heavily reliant on Airtm, which has been blocked in Venezuela since 2018.
"Our web app Airtm.com remains blocked by local ISPs in Venezuela, however with a VPN enabled Venezuelans have no issue avoiding this blockade," an Airtm spokesperson told Decrypt. "We've also recently released our Airtm Android app, specifically built to prevent these accessibility issues moving forward."
Neither the US Treasury nor the Federal Reserve has yet responded to Decrypt's request for comment.