USDC, a dollar pegged ethereum based token with a current market cap of $2.7 billion, has been used for the first time by the American government to enact foreign policy.
Jeremy Allaire, the CEO of Circle which created USDc together with Coinbase, stated “stablecoins are now a tool of US foreign policy.”
In a fairly detailed description, Circle says they partnered with the Bolivarian Republic of Venezuela, led by President-elect Juan Guaido, and U.S.-based fintech innovator Airtm to bypass the Maduro government to deliver aid to Venezuela with America’s backing:
“In this new aid delivery flow, the US Treasury and Federal Reserve releases seized funds to the Guaidó government’s account at a US bank. The Guaidó government then uses those funds to mint USDC.
The USDC is then sent to Airtm, a bank-and-blockchain connected dollar-denominated payment platform that powers digital dollar payments throughout North, Central, and South America.
Airtm’s network of dollar-to-anything forex agents enables withdrawals to local currency in Latam bank accounts at free market (vs. government-rigged) rates.
Once the USDC is received on Airtm wallets, it is then dispersed to accounts of Venezuelan healthcare workers as AirUSD (Airtm’s stablecoin-backed dollar token).
The healthcare workers are then able to withdraw to their local bank accounts as bolivars at free market rates, send to other users, or even spend the funds online anywhere using Airtm’s virtual debit card – bypassing the need for a bank at all.
With over half a million users in Venezuela, Airtm’s network is big enough to support enough peer-to-peer transactions to make this a viable solution for day to day transactions such as paying rent.”
As you might remember there was this whole political standoff last year where Maduro’s government wouldn’t let in American aid.
Analysts suggest Maduro maintains some popularity due to handing out food and other aid. Thus if US was doing the same, that would undermine his support.
The problem was however how to get the aid there, something the crypto space organically resolved early on when we all became aware the situation in Venezuela had devolved into desperation.
A Think Tank then suggested the US government should use crypto as well to send aid and bypass restrictions, with it so announced today they have done just that.
Something that means as far as this space is concerned, America has become the latest to join Iran in using crypto to bypass sanctions.
We suspect Iran has been doing so since last year, but they made it official recently by passing a law to use bitcoin for imports.
That’s a paradigm shift, and that America is now effectively doing the same in bypassing what can be called Venezuelan sanctions, emphasizes just how much of a shift it may well be.
It can also mean a transformation for the aid industry which often complains corrupt governments pocket the aid to the little benefit of their people.
With crypto, systems can be set up whereby the funds go directly to the people, especially if there’s government level involvement as was the case here.
That’s something difficult to pull off in some ways, but where Africa is concerned Paxos for example can probably facilitate a lot of it, and in South Africa there’s Airtm which is what Venezuelan bitcoiners used as well.
This all also means that whether Ray Dalio or Jamie Dimon likes it or not, the government can not ban crypto because they very much need it to fund their covert spy operations or in this case aid operations and soon enough to escape mass deflation with it just a matter of time until central banks pile on bitcoin instead of gold.