Tether commits to freezing transactions with sanctioned entities amid allegations that Venezuela's PDVSA is using USDT to circumvent U.S. oil sanctions.
Tether, the issuer of the popular stablecoin USDT, has announced its commitment to blocking transactions with entities sanctioned by the Office of Foreign Assets Control (OFAC). This decision follows a Reuters report alleging that Petróleos de Venezuela, S.A. (PDVSA), Venezuela's state-run oil company, has been using USDT to circumvent U.S. sanctions and facilitate oil exports.
A Tether spokesperson conveyed the company's stance to Cointelegraph, stating, "Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen promptly." The commitment is in direct response to concerns that PDVSA has been leveraging USDT as a workaround to sanctions which have recently been reenforced by the United States due to Venezuela's lack of progress in electoral reforms.
The U.S. Treasury Department has set a deadline of May 31 for PDVSA's customers and providers to cease transactions, creating significant pressure on the oil company to find alternative methods for conducting business. The reimposed sanctions threaten to hinder Venezuela's ability to increase its oil production and exports, as future business dealings with the country will necessitate U.S. authorization.
According to sources cited by Reuters, PDVSA has shifted its oil sales to USDT with the aim of preventing its funds from being frozen in foreign bank accounts as a result of the new sanctions. The shift comes in the wake of a scandal in 2023, where $21 billion in receivables for oil exports went unaccounted for, raising concerns about corruption within PDVSA.
The sources further suggest that PDVSA has revised its spot oil deals to a prepayment contract model, requiring USDT for exported cargo. The company is also reported to be insisting that new customers looking to engage in oil transactions possess USDT in a digital wallet. Companies seeking to reestablish business with PDVSA after a six-month licensing approval granted by the U.S. in October 2023 have had to use intermediaries to meet these payment requirements.
