Following introduction of the cryptocurrency ‘Petro’ in February 2018, the US President has issued a further Executive Order, which prohibits US persons, and persons within the US, from engaging in any dealings in “any digital currency, digital coin or digital token” issued by Venezuela on or after 9 January 2018, which would include the Petro.
In March, the Venezuelan maritime authority, INEA, issued a circular to Venezuelan shipping agents that payment for all services provided to foreign flag vessels are to be paid in Petros.
The West of England P&I Club, with data provided by US attorneys Freehill Hogan & Mahar, advise how these impact on foreign shipping.
This means that foreign shipowners will have to pay for such services as pilotage and towage in Petros, although as of April 6th it appears that the mechanism for Petros payments had not yet been implemented and payments were still being made in US dollars. Reportedly, there is a possibility that the requirement for Petros payments may be extended to other maritime services provided by government agencies in Venezuela.
As explained, the requirement that payment for shipping services provided by Venezuelan governmental agencies be made in Petros may expose foreign shipowners to the prohibitions of the Executive Order. In addition to preventing US persons from engaging in any transactions relating to Venezuelan digital currency, the order (13827), in Section 2, prohibits any transaction “… that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order….”.
As such, Freehill Hogan & Mahar conclude:
Foreign shipowners trading with Venezuela should exercise caution to be certain that any remittances made through the US financial system in connection with their Venezuelan trade are not ultimately being used to purchase Petros. In the wake of E.O. 13827 and the INEA Circular, it is anticipated that US banks will scrutinize all financial transactions relating to Venezuela with great care, particularly those involving shipping. Members may wish to consider the use of alternate currencies for payments to agents such as the Euro, through non-US banks.
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