Tether, the issuer of the USDT stablecoin, has announced to freeze transactions linked to entities sanctioned by the Office of Foreign Assets Control (OFAC). This decision follows revelations that Venezuela’s state-run oil company, PDVSA, was reported to be using cryptocurrencies like USDT to circumvent U.S. oil sanctions.
A Tether spokesperson affirmed the company’s commitment to compliance, stating, “Tether respects the OFAC SDN list and is committed to working to ensure sanction addresses are frozen promptly.” This commitment is in response to allegations made in a recent Reuters report suggesting that PDVSA has been leveraging digital currencies to continue its oil and fuel exports despite facing new restrictions imposed by the United States.
According to the report, the U.S. Treasury Department has set a deadline of May 31 for PDVSA’s customers and suppliers to cease transactions, following Venezuela’s failure to enact electoral reforms. The renewed sanctions are expected to significantly hamper Venezuela’s ability to increase oil production and exports, as any transactions involving the South American country now require U.S. authorization.
Sources cited in the report claim that in an effort to mitigate the impact of these sanctions, PDVSA has shifted its oil sales to Tether to prevent Venezuelan oil revenues from being frozen in foreign bank accounts. Additionally, PDVSA has reportedly adjusted its transaction methods for 2024, moving from traditional deals to a contract model that demands advance payment in USDT for oil cargoes. It is said that new customers must possess cryptocurrency in digital wallets to engage in oil transactions with PDVSA.