Venezuela to Levy a 20% Tax on Digital Currency Transactions as Adoption Grows

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Digital currency adoption in Venezuela has exploded in recent years, with many locals moving away from the unstable and rapidly depreciating local currency, the bolivar. To protect the bolivar, the government is reportedly going after digital currency users, imposing a 20% tax on BTC transactions to curb its growing use for payments in the South American country.

Earlier this week, Venezuela’s National Assembly held the second hearing of a new bill to impose a heavy tax on large financial transactions involving currencies other than those issued by the government, namely the bolivar and the disastrous Petro digital currency.

According to local reports, the bill has now been passed. This will force locals – individuals or businesses – to pay between 2% and 20% in taxes each time they use digital currencies or other non-local currencies such as the US dollar to transact.

For the government of President Nicolas Maduro, this decision was necessary to ensure that the national fiat currency does not end up no longer being used in the country.

The Bolivar has been one of the most disastrous currencies in the world, losing 70% of its value in 2021 alone. Over the past decade, the Bolivar has essentially lost almost all of its value as hyperinflation, l Political instability and economic sanctions have taken their toll.

To this end, the bill affirmed: “It is necessary to guarantee at least equal or more favorable treatment to payments and transactions carried out in national currency or in crypto-currencies or crypto-assets issued by the Bolivarian Republic of Venezuela compared to payments made in foreign currency.”

Venezuela continued to be one of the leading countries in digital currency adoption. Unlike some developed countries where most digital currencies are considered speculative investment instruments, Venezuelans have turned to them for use in day-to-day transactions at a time when the bolivar has continued to fall.

Maduro’s alternative, the digital currency Petro, was even more disastrous. Despite its valiant efforts to promote it, including imposing it on people and institutions, the Petro has massively failed.

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