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Venezuela

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#59
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Archived
Created
2025-04-12 06:41
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Live

Executive Summary

Venezuela's retail cryptocurrency trading is Allowed-Regulated under the Constituent Decree on the Integral System of Cryptoassets, with SUNACRIP as the primary regulator. VASPs must obtain licenses and adhere to AML/KYC rules. However, SUNACRIP's operational status has been compromised by corruption, leading to regulatory uncertainty, a mining ban, and the prevalence of P2P trading.

Key Pillars

  • Primary Regulator: National Superintendency of Cryptoassets and Related Activities (SUNACRIP), responsible for regulating the creation, issuance, operation, and use of cryptoassets.
  • Regulatory Approach: Legal framework permitting crypto activities, but with licensing and supervision of VASPs.
  • Core Compliance Requirements: VASPs must obtain licenses and adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures.

Landmark Laws

  • Constituent Decree on the Integral System of Cryptoassets (SISCA), early 2019: Established the legal framework for cryptoassets, allowing their creation, circulation, use, and exchange.
  • Ruling No. 044-2021: Detailed specific AML/CFT rules for the sector, aligning with FATF's travel rule.
  • 2022 Tax Reform: Introduced the Impuesto a las Grandes Transacciones Financieras (IGTF) applicable to payments in foreign currency or cryptocurrencies (other than the Petro).

Considerations

  • Crypto transactions are subject to taxation, including the Impuesto a las Grandes Transacciones Financieras (IGTF) on foreign currency/crypto payments and potential capital gains taxes on general crypto transactions.
  • Regulatory risks and uncertainties have increased since March 2023 due to the SUNACRIP intervention and subsequent reorganization.
  • The failure of the Petro and the ban on crypto mining further complicate the regulatory landscape.
  • The reliance on P2P trading and stablecoins reflects operational challenges and currency controls.

Notes

  • SUNACRIP's intervention in March 2023 due to a corruption scandal significantly impacted the regulatory environment, leading to a regulatory vacuum and operational challenges for VASPs.
  • The government's state-backed cryptocurrency, the Petro, failed and was reportedly shut down in 2024.
  • Despite legalizing mining in 2020, a ban on crypto mining was reportedly implemented in May 2024, citing strain on the power grid.
  • P2P trading remains prevalent due to economic conditions, sanctions, and regulatory uncertainties.

Detailed Explanation

Venezuela's regulatory stance on retail cryptocurrency trading is categorized as Allowed-Regulated. This framework, established in response to hyperinflation and economic instability, is primarily governed by the Constituent Decree on the Integral System of Cryptoassets (SISCA), enacted in early 2019. The decree permits individuals and legal entities, both resident and non-resident, to engage in the creation, circulation, use, and exchange of cryptoassets. The National Superintendency of Cryptoassets and Related Activities (SUNACRIP), originally SUPCACVEN in 2018 and reformed in 2019, was established as the primary regulatory body, possessing broad powers to regulate cryptoasset activities, including licensing Virtual Asset Service Providers (VASPs). SUNACRIP implemented regulations mandating licenses for VASPs and adherence to AML/KYC procedures, detailed in regulations like Ruling No. 044-2021, which aligned with FATF's travel rule for certain transactions. A 2022 tax reform introduced the Impuesto a las Grandes Transacciones Financieras (IGTF), a tax applicable to payments in foreign currency or cryptocurrencies (excluding the Petro), with rates potentially reaching 20% for specific transactions. Crypto transactions, in general, may face capital gains taxes.

However, the regulatory environment has faced significant challenges. In March 2023, SUNACRIP was intervened due to a corruption scandal involving its leadership and the misuse of crypto funds linked to the state oil company PDVSA. This intervention, extended until March 2024, paralyzed SUNACRIP's operations, leading to closures of mining facilities and suspensions of some exchange operations. Although SUNACRIP was reportedly reorganized and expected to resume operations in March 2024, its current effectiveness remains unclear. The government's state-backed cryptocurrency, the Petro, failed to gain traction and was reportedly shut down in 2024. Despite initially legalizing and regulating Bitcoin mining in 2020, the government reportedly banned crypto mining in May 2024, citing strain on the power grid.

Economic conditions, sanctions, and regulatory uncertainties have led to the dominance of peer-to-peer (P2P) trading, bypassing formal VASP channels. Stablecoins are particularly popular for daily transactions, savings, and remittances. The legal framework formally permits crypto ownership and trading for individuals, but the operational status and enforcement capacity of SUNACRIP have been severely compromised since early 2023. This creates significant practical uncertainty, even though the underlying laws remain in place. The ban on mining and the failure of the Petro further complicate the landscape. As a result, retail users actively trade, heavily utilizing P2P platforms and stablecoins, operating in a grey area due to the unclear enforcement environment.

According to Vertex AI Search (Aug 2024), the Cryptoassets Constituent Decree allowed for the creation, circulation, use, and exchange of crypto assets by individuals and legal entities (resident and non-resident). Bitrawr (2025) notes that the use of cryptocurrencies, as well as mining, is currently legal in Venezuela. Coinfomania (Apr 2025) states that SUNACRIP has extensive power in matters of mining, exchanges and crypto activities in general, and also requires crypto exchanges, miners and brokers to obtain a license. Bitcoin.com News (May 2021) reported that Sunacrip published new AML/KYC requirements for VASPs. Didit (Nov 2024) noted SUNACRIP's intervention and paralysis due to a corruption scandal, leading to a regulatory vacuum. Vertex AI Search (Aug 2024) also reported the ban on crypto mining in May 2024 and SUNACRIP's reorganization. EL PAÍS English (Jan 2025) highlights the gaining popularity of cryptocurrency exchange networks among Venezuelans.

Summary Points

Here's a bullet-point summary of the report on Retail Cryptocurrency Trading Status in Venezuela, designed for quick comprehension:

Retail Cryptocurrency Trading Status in Venezuela: April 12, 2025

I. Overall Regulatory Status:

  • Allowed-Regulated: Retail cryptocurrency trading is legally permitted but subject to regulation. However, practical enforcement faces significant challenges.

II. Key Regulatory Bodies:

  • National Superintendency of Cryptoassets and Related Activities (SUNACRIP):
    • Primary regulator for cryptoassets.
    • Responsible for licensing and supervising Virtual Asset Service Providers (VASPs).
    • Powers include regulating creation, issuance, operation, and use of cryptoassets.
    • Current Status: Intervened and effectively paralyzed since March 2023 due to corruption scandal. Reorganization announced in March 2024, but effectiveness remains unclear.

III. Important Legislation and Regulations:

  • Constituent Decree on the Integral System of Cryptoassets (SISCA) (2019):
    • Primary legal framework for cryptoassets.
    • Allows creation, circulation, use, and exchange of cryptoassets by individuals and legal entities (resident and non-resident).
    • Defines cryptoassets as digital assets using cryptography and distributed ledgers.
    • Empowers the National Executive to regulate the crypto market.
  • Ruling No. 044-2021:
    • Details specific AML/CFT rules for the sector.
    • Includes requirements aligned with FATF's travel rule.
  • 2022 Tax Law Reform (IGTF):
    • Introduced a tax on payments made in foreign currency or cryptocurrencies (excluding the Petro).
    • Potential rates up to 20% for certain transactions.
    • General crypto transactions may be treated as capital gains.

IV. Requirements for Compliance:

  • Licensing for VASPs: Crypto exchanges, miners, and brokers require licenses from SUNACRIP.
  • KYC/AML Procedures: VASPs must implement Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures.
    • AML/KYC compliance presumed to correlate well with global standards, but public enforcement procedures have no lengthy details.

V. Notable Restrictions or Limitations:

  • SUNACRIP's Intervention: Corruption scandal and subsequent reorganization have severely compromised SUNACRIP's operational status and enforcement capacity.
  • Mining Ban: Crypto mining was reportedly banned in May 2024, citing excessive strain on the national power grid.
  • Petro Failure: The state-backed Petro cryptocurrency largely failed and was reportedly shut down in 2024.

VI. Recent Developments or Changes:

  • SUNACRIP Reorganization: Announced in March 2024, but practical impact and enforcement remain uncertain.
  • Continued P2P Dominance: Peer-to-peer (P2P) trading remains highly prevalent due to economic conditions, sanctions, and regulatory uncertainties.
  • Stablecoin Popularity: Stablecoins are widely used for daily transactions, savings, and remittances.

Full Analysis Report

Okay, here is the comprehensive report on the current status of retail cryptocurrency trading in Venezuela, prepared with the perspective of a financial regulatory analyst.

```python
Report: Retail Cryptocurrency Trading Status in Venezuela

Date: April 12, 2025

Prepared For: Internal Review
Prepared By: Financial Regulatory Analyst Unit

Topic: Retail_Trading_Status

Description: This section assesses the legal permissibility for individual citizens and residents in Venezuela to buy, sell, and hold cryptocurrencies. It details the regulatory environment surrounding this activity, including applicable laws, regulatory bodies, and requirements such as KYC/AML.

1. Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

Venezuela's stance on retail cryptocurrency trading is categorized as Allowed-Regulated. This status reflects the existence of a specific legal framework and a designated regulatory body, even though the practical enforcement and operational status of this framework have faced significant challenges and uncertainty, particularly in recent years.

  • Historical Context and Legal Framework: Faced with hyperinflation, economic instability, and international sanctions, Venezuela saw significant organic adoption of cryptocurrencies like Bitcoin as a means for transactions, remittances, and a store of value [9, 15, 21]. In response, and also driven by its own strategic interests (including the launch of the state-backed Petro cryptocurrency), the Venezuelan government established a formal regulatory structure [2, 4, 5].
    • The Constituent Decree on the Integral System of Cryptoassets (SISCA), published in early 2019, serves as the primary legal framework [3, 7, 8]. This decree formally allowed the creation, circulation, use, and exchange of cryptoassets by individuals and legal entities, both resident and non-resident [2, 5]. It defined cryptoassets broadly as digital assets using cryptography and distributed ledgers [7].
    • The decree empowered the National Executive to regulate the crypto market, authorize virtual exchanges, and oversee related activities [5]. It generically stated the government's intent to promote and guarantee the use of cryptocurrencies as a means of payment [5].
  • Regulatory Body (SUNACRIP): The National Superintendency of Cryptoassets and Related Activities (SUNACRIP) was established (initially as SUPCACVEN in 2018, then reformed into SUNACRIP in 2019) as the primary regulator [2, 3, 4, 12]. SUNACRIP was granted broad powers to regulate the creation, issuance, operation, and use of cryptoassets, including licensing and supervising Virtual Asset Service Providers (VASPs) like exchanges, miners, and wallet providers [3, 4, 5, 8].
  • Permissibility for Individuals: The legal framework explicitly permits individuals to engage with cryptocurrencies [2, 5, 7]. Buying, selling, and holding cryptocurrencies like Bitcoin are legal activities for Venezuelan citizens and residents [7, 8, 9]. Major international exchanges operate and are popular within the country, facilitating these activities [9, 21].
  • Regulatory Requirements (KYC/AML): SUNACRIP implemented regulations requiring VASPs operating in Venezuela to obtain licenses and adhere to specific rules [3, 8]. This included establishing Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures [3, 8, 13]. For instance, Ruling No. 044-2021 detailed specific AML/CFT rules for the sector, including requirements aligned with the FATF's travel rule for transactions above a certain threshold [10, 13]. Exchanges operating legally are expected to perform KYC verification [9]. However, the public details regarding enforcement procedures were noted as lacking [3].
  • Taxation: Crypto transactions are subject to taxation in Venezuela. A 2022 law reform introduced a tax (Impuesto a las Grandes Transacciones Financieras - IGTF) applicable to payments made in foreign currency or cryptocurrencies (other than the Petro), with potential rates up to 20% for certain transactions involving designated taxpayers [3, 24]. General crypto transactions may be treated as capital gains [3].
  • Recent Challenges and Uncertainty: Despite the established framework, the regulatory environment has become complex and uncertain.
    • SUNACRIP's Status: In March 2023, SUNACRIP was intervened and effectively paralyzed due to a major corruption scandal involving its leadership and alleged misuse of crypto funds related to the state oil company PDVSA [2, 3, 10, 18]. This intervention was extended multiple times, reportedly until March 2024 [18, 22]. While there were announcements in March 2024 that SUNACRIP had been reorganized and was expected to resume operations, its current effectiveness and the practical enforcement of its regulations remain unclear [2, 10, 20]. This regulatory vacuum has impacted the sector, leading to closures of mining facilities and suspensions of some exchange operations [10, 18].
    • Petro Failure: The government's own cryptocurrency, the Petro, largely failed to gain traction, faced operational issues, was declared illegal by the opposition-led National Assembly early on, and was reportedly shut down entirely in 2024 [2, 4, 21].
    • Mining Ban: Despite legalizing and regulating Bitcoin mining in 2020 (requiring registration in the RIM and operation through the National Mining Pool) [3, 4, 14], the government reportedly banned crypto mining in May 2024, citing excessive strain on the national power grid, following earlier crackdowns related to the corruption probe [2].
    • P2P Dominance: Due to economic conditions, sanctions affecting traditional finance, and regulatory uncertainties, peer-to-peer (P2P) trading remains highly prevalent, often bypassing formal VASP channels [15, 21]. Stablecoins, in particular, have become very popular for daily transactions, savings, and remittances [20, 21].

Conclusion: While Venezuela has a legal framework regulating cryptocurrency activities (Allowed-Regulated), including retail trading and requirements for VASPs, the operational status and enforcement capacity of the primary regulator (SUNACRIP) have been severely compromised since early 2023 due to a corruption scandal and subsequent extended reorganization. This creates significant practical uncertainty, even though the underlying laws permitting crypto ownership and trading for individuals remain formally in place. The ban on mining and the failure of the Petro further complicate the landscape. Retail users continue to actively trade, heavily utilizing P2P platforms and stablecoins, often operating in a grey area due to the unclear enforcement environment.

3. Relevant Text Excerpts:

  • On Legality and Framework: "The Cryptoassets Constituent Decree was a general legal framework, which allowed for the creation, circulation, use and exchange of crypto assets by individuals and legal entities (resident and non-resident)." (Vertex AI Search citing vertexaisearch.cloud.google.com, Aug 2024) [2]
  • On Legality for Individuals: "The use of cryptocurrencies, as well as mining, is currently legal in Venezuela. With Venezuela's bolivar currency experiencing hyperinflation since 2016, the country has seen wider acceptance of cryptocurrencies like Bitcoin." (Bitrawr, 2025) [9]
  • On Regulation via SUNACRIP: "Under the Constituent Decree on the Integral System of Cryptoassets (SIC), SUNACRIP has extensive power in matters of mining, exchanges and crypto activities in general." (Coinfomania, Apr 2025) [3]
  • On Licensing: "SUNACRIP also requires crypto exchanges, miners and brokers to obtain a license." (Coinfomania, Apr 2025) [3]
  • On KYC/AML: "Sunacrip, the Venezuelan cryptocurrency watchdog, has recently published a new set of AML/KYC requirements for VASPs (Virtual Asset Service Providers) that establishes new and updated rules about the kind of information these providers must require and share with the Venezuelan government..." (Bitcoin.com News, May 2021) [13] "AML/KYC compliance is presumed to correlate well with global standards, but public enforcement procedures have no lengthy details." (Coinfomania, Apr 2025) [3]
  • On SUNACRIP's Intervention: "Since March 2023, SUNACRIP, the main regulatory body, has been intervened and paralyzed due to a corruption scandal. This intervention has been extended until March 2024, which has created a regulatory vacuum and has led to the closure of mining facilities and the suspension of operations of some cryptocurrency exchanges." (Didit, Nov 2024) [10] "In March 2024, it was announced that SUNACRIP had been reorganized and was expected to resume operations, which were suspended in March 2023 because of the oil scandal." (Vertex AI Search citing vertexaisearch.cloud.google.com, Aug 2024) [2]
  • On Mining Ban: "In May 2024, officials announced a ban on crypto mining... on the basis that the practice was placing too great a burden on the power grid." (Vertex AI Search citing vertexaisearch.cloud.google.com, Aug 2024) [2]
  • On Continued Use: "Despite U.S. sanctions, strict oversight by the government apparatus and the ups and downs of inflation, a cryptocurrency exchange network is gaining in popularity among Venezuelans seeking easier ways to make transactions, receive remittances and take refuge from the devaluation of the bolivar." (EL PAÍS English, Jan 2025) [20]

4. Source Links:

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