Remote VASP serving residents in Venezuela

Custodial License Requirements:

Requirement: Any natural or legal person intending to carry out activities related to crypto assets in Venezuela, including providing services that would encompass custody, must register with SUNACRIP and obtain the corresponding license. The law does not define a separate "custody license" but rather general licenses for "providers of cryptoactive services."

Decreto Constituyente sobre el Sistema Criptoactivo Venezolano (Constituent Decree on the Venezuelan Cryptoactive System), published in Gaceta Oficial Extraordinaria N° 6.370 on April 9, 2018.

Article 5 mandates that the exercise of any cryptoactive activity requires prior authorization from SUNACRIP.

Legal entity establishment and registration in Venezuela.

Minimum capital requirements (which vary by license type, e.g., for exchange houses).

Fit and proper requirements for directors and management.

Technical and operational capabilities.

Compliance with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations.

Constitutional Law of the Integral System of Cryptoassets (Ley Constitucional del Sistema Integral de Criptoactivos): This foundational law, enacted in 2018, establishes the legal basis for cryptoassets, mining, exchanges, and other related activities, and grants SUNACRIP its regulatory powers.

Providencia N° 094-2020 (dated October 16, 2020): This is a key regulation that establishes the "General Rules of Prevention and Control of Money Laundering, Financing of Terrorism and Proliferation of Weapons of Mass Destruction, Applicable to Virtual Asset Service Providers (VASPs) and Users of the National Cryptoasset System." This providencia is crucial for AML/CFT compliance in the crypto sector.

Identify and verify the identity of all clients/users for any transaction, regardless of amount (Article 8 of Providencia 094-2020).

Maintain records of all transactions.

Suspicious Transaction Reporting (STR) Threshold: The focus is on identifying and reporting suspicious transactions to the National Financial Intelligence Unit (UNIF), rather than a blanket information exchange for all transactions above a specific amount.

All must be registered with SUNACRIP.

Internal Systems and Reporting: VASPs are required to:

Entity Targeted: Individuals and businesses operating cryptocurrency mining farms or crypto exchanges without the required licenses, permits, and registration from SUNACRIP. This also often included those engaged in electricity theft to power mining operations. Violation Type: Operating illegal cryptocurrency mining farms, facilitating unregistered crypto transactions, non-compliance with SUNACRIP's regulatory framework, and in many cases, electricity theft. Penalty Amount: Seizure and confiscation of high-value mining equipment (ASIC miners, GPUs), shutdown of operations, and arrests of operators. Specific monetary fines, while stipulated in SUNACRIP regulations, were less frequently publicized compared to asset seizures.

Entity Targeted: High-ranking officials from the state oil company PDVSA, the Superintendency of Cryptoassets (SUNACRIP), the Venezuelan Guayana Corporation (CVG), and associated private businessmen. Notably, Joselit Ramírez Camacho, the former head of SUNACRIP, was among those arrested. Violation Type: Corruption, embezzlement, illicit enrichment, money laundering, and treason. The scheme involved diverting billions of dollars in oil sales by conducting transactions outside official channels, often using cryptocurrencies and an parallel financial system to bypass sanctions and hide funds. Penalty Amount: The Public Prosecutor's Office initially reported the embezzlement of over $21 billion USD, though later estimates varied. Penalties include the arrest of over 60 individuals, confiscation of luxury assets (vehicles, real estate), and ongoing trials.

Outcome: A major political and economic scandal that led to a significant purge within the Venezuelan government and state-owned companies. SUNACRIP was effectively intervened and restructured, its functions curtailed, and its leadership entirely replaced. The scandal severely undermined trust in government-backed crypto initiatives and has had a chilling effect on the local crypto ecosystem, increasing regulatory uncertainty.

Outcome: Forced compliance with the government's centralized crypto regulations, reduction of informal or illicit mining activities, and an attempt to consolidate control over all crypto-related economic activity within the state's purview. These actions contributed to a more controlled and less decentralized crypto environment in Venezuela.