Blockchain giant Circle obtains US government permission to use USDC to issue aid to Venezuelan residents
Blockchain giant Circle announced on Friday that it is using USDC, a USD-pegged stable currency issued by Coinbase, to distribute rescue funds to Venezuelan medical staff and other locals.
The announcement stated that this move bypassed Maduro’s control over the domestic financial system. Stablecoin solutions and distribution channels are the only viable funding allocation options for the Republic of Venezuela, helping to alleviate local hyperinflation and economic collapse. It marks the first time that global foreign policy has used stable coins as foreign aid.
CEO Jeremy Allaire said that this is the company’s first cooperation with the government.
Allaire said in an interview:
“Historically, many countries, including the United States, recognized Juan Guaido as Venezuelan president. Maduro did not accept the election results and continued to hold power.”
According to BBC News, the Venezuelan National Assembly appointed Guaidó as interim president in January 2019 and declared Maduro the “usurper”.
Allaire said: “With this incident and the implementation of sanctions, funds belonging to the government were confiscated.”
The U.S. Treasury Department has been trying to distribute these funds directly to Venezuelan residents, but Maduro tried to prevent the distribution of these funds, making this task difficult.
Airtm, a peer-to-peer payment startup, has been working hard to solve this problem, with limited results so far.
Allaire declined to say which part of the US government is working with Circle and Airtm, but said Circle has obtained permission to use USDC to allocate funds.
According to the terms of the agreement, Airtm has a business account with Circle. Funds flow to Airtm through Circle, and Airtm can distribute USDC to any mobile digital wallet user. Allaire said Airtm currently has 500,000 users in Venezuela.
Allaire said: “In a sense, this is a way to bypass the state-controlled banking system and distribute directly to people.”
“I think this marks the first time that the United States has effectively implemented its global foreign policy goals while stabilizing foreign aid, because the existing dollar banking system cannot accomplish this.”
He said that through the use of USDC, Venezuelan people can spend in U.S. dollars. The U.S. dollar is currently much more stable than Venezuela’s local currency, the Bolivar.
In 2020 alone, Bolivar’s inflation rate reached 235.5%.
All local residents need to obtain stablecoins through mobile phones and some kind of internet access.
Allaire said: “In this case, you can use a VPN. You can cross the Internet and bypass these controls.”
