Stablecoin issuer / redeemer in Venezuela

Legislation Reference: Decreto Constituyente sobre el Sistema Criptoactivo Integral (Official Gazette link, though direct government links can sometimes be unstable, this is the original publication.)

Regulatory Body: Superintendencia Nacional de Criptoactivos y Actividades Conexas (SUNACRIP)

General Classification: Stablecoins are generally not explicitly categorized as "e-money," "payment tokens," or "securities" in the precise terminology used by international financial regulators. Instead, they fall under the broad definition of "criptoactivo" (crypto-asset) or "activo virtual" (virtual asset) as defined by the Constituent Decree.

Article 3 of the Decree defines "Criptoactivo" as "any representation of value that is expressed in units of value or cryptographically protected data, used for the execution of financial, commercial, or other operations, and which is not issued or guaranteed by a central bank or public authority, and is not physically represented in legal tender."

While stablecoins aim to be stable, their underlying technology and issuance methods place them firmly within SUNACRIP's purview as a crypto-asset.

Implication: This broad classification means any stablecoin operating in Venezuela, regardless of its specific peg or mechanism, is subject to the general crypto-asset regulations, particularly licensing requirements.

The Constituent Decree does not explicitly define specific reserve requirements for private stablecoin issuers. The focus of the law is on licensing and control of activities rather than detailed prudential requirements for specific crypto-asset types like stablecoins.

For the state-backed Petro, its "reserve" is theoretically a basket of Venezuelan commodities (oil, gold, iron, diamonds), though its actual backing and convertibility have been subjects of considerable debate and lack transparency.

Any private stablecoin issuer would need to present its operational model, including its backing mechanism, as part of the licensing process with SUNACRIP, which would then evaluate its soundness. However, there are no predefined statutory ratios or asset types for reserves.

Mandatory Licensing: This is a cornerstone of Venezuela's crypto regulatory framework. The Constituent Decree mandates that any natural or legal person engaging in activities related to crypto-assets must obtain a license from SUNACRIP.

Article 9 of the Decree states: "Any natural or legal person, public or private, that intends to carry out activities of creation, issuance, commercialization, exchange, or any other activity related to crypto-assets and virtual assets, must obtain prior authorization from the National Superintendency of Crypto-assets and Related Activities (SUNACRIP)."

Scope: This explicitly includes the issuance of stablecoins. An entity wishing to issue a stablecoin in Venezuela would need to apply for and receive the necessary authorization from SUNACRIP, detailing its business model, technology, security measures, and compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.

The Constituent Decree does not explicitly define specific reserve requirements for private stablecoin issuers. The focus of the law is on licensing and control of activities rather than detailed prudential requirements for specific crypto-asset types like stablecoins.

Redemption rights would primarily be governed by the terms and conditions set forth by the specific stablecoin issuer, as approved by SUNACRIP during the licensing process.

Given the high level of state control and the potential for capital controls, any redemption mechanism would likely be scrutinized to ensure compliance with national economic policies and foreign exchange regulations.

Venezuela's regulatory framework was established before the widespread discussion and specific concerns surrounding algorithmic stablecoins (like Luna/UST). As such, there are no specific rules or prohibitions explicitly targeting algorithmic stablecoins.

An algorithmic stablecoin would simply be classified as a "criptoactivo" and subject to the general licensing and oversight requirements of SUNACRIP. Its algorithmic mechanism would be part of the operational model presented for approval, and SUNACRIP would assess its viability and risks. Given the Venezuelan context, the volatility and potential for instability associated with some algorithmic designs might make approval challenging.

Interaction with Private Stablecoins: The existence and promotion of the Petro by the Venezuelan government significantly shape the landscape for any private stablecoin. Private stablecoins would operate within an ecosystem where the state already offers its own digital asset, and competition or perceived threats to the Petro's role could influence regulatory decisions.

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).

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

Fit and proper requirements for directors and management.

Segregation of Client Assets Rules:

Specific Rules: There are no explicit, detailed regulations mandating the segregation of client digital assets from the custodian's proprietary assets.

Specific Requirements: There are no explicit requirements for custodians to obtain specific insurance or bonding for client digital assets against theft, loss, or operational failures.

Adopted: While Venezuela does not explicitly use the term "Travel Rule" in its legislation, the principles underlying the FATF Travel Rule – primarily the identification of both the originator and beneficiary of a virtual asset transfer – are incorporated into its broader AML/CFT framework for cryptoassets.

Spirit vs. Letter: The Venezuelan framework emphasizes robust Know Your Customer (KYC) and Customer Due Diligence (CDD) for all users of regulated crypto services, and mandates reporting of suspicious transactions. This addresses the spirit of identifying parties to transactions, but the specific mechanism of inter-VASP information exchange for all transactions above a threshold is less clearly articulated compared to other jurisdictions directly adopting the FATF guidance.

FATF Status: Venezuela has been under increased monitoring by the FATF due to strategic deficiencies in its AML/CFT regime. While it has made commitments to address these deficiencies, its overall compliance and effectiveness are still under scrutiny. This means that while regulations exist on paper, their practical implementation and alignment with global standards can be inconsistent.

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.

Focus on Identification for All Transactions: Instead, the Venezuelan framework requires VASPs to:

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

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.

Issuers: Entities involved in the issuance of cryptoassets.

All must be registered with SUNACRIP.

SUNACRIP Registration: Any individual or legal entity involved in activities related to crypto assets (e.g., miners, exchanges, wallet providers, those offering services for/with crypto) is generally required to register with SUNACRIP and comply with its regulations. This implies a reporting obligation.

Tax on Large Financial Transactions (Impuesto a las Grandes Transacciones Financieras - IGTF): This is a crucial development.

In 2022, the Law on the Tax on Large Financial Transactions (IGTF) was amended to include transactions in foreign currency and cryptocurrencies that are NOT issued by the Bolivarian Republic of Venezuela (i.e., non-Petro cryptocurrencies).

Tax Rate: The IGTF imposes a tax (which can range from 2.5% to 20%, but is often set around 2.5% to 3% by the national executive) on certain debit transactions or payments made by specified taxpayers in foreign currency or non-Petro cryptocurrencies. This tax applies to the value of each transaction.