With the help of this system, the regulator can manage crypto transactions’ impact on the stability of its exchange market. Recently, analysts have connected the state of peer-to-peer (P2P) crypto markets to the Bolivar’s recent decline in value.
Tracking Cryptocurrency Transactions in real-time
The Venezuelan government intends to build a monitoring system to track the activities of cryptocurrency-based peer-to-peer exchanges. This protects the value of the Bolivar, Venezuela’s fiat currency.
The nation’s banking watchdog, Sudeban, revealed that the regulatory body is working on a project to design a real-time banking monitoring system that tracks crypto transactions. According to Sudeban statement, the project development is being done in collaboration with Sunacrip, the nation’s cryptocurrency regulator.
Sudeban further said that the primary purpose of this movement is to stop the irregular practices that caused a decline in the value of the country’s fiat currency and instability in its exchange market.
Hence, the Venezuelan government wants to investigate whether there is a relationship between the transaction volumes in the digital currency markets and the exchange rate of the Venezuelan Bolivar compared to the US dollar.
Meanwhile, analysts have established that the crypto market downturn is due to the collapse of the FTX crypto exchange and the sudden hike in the exchange rate of the US dollar to the Venezuelan Bolivar.
However, the analysts added that other factors, such as the market’s inherent oversupply of fiat money brought on by holiday payments, contributed to this unexpected hike in the exchange rate.
According to Legalrocks, a national crypto-focused law company, Venezuelan authorities have banned more than 75 bank accounts as a result of suspicious crypto-related transactions from December 2021 to date.
Stopping The Depreciation
In an announcement earlier this month, Nicolas Maduro, president of Venezuela, believes this move will significantly reduce the sharp decline of the Bolivar to the USD, which has become more profound in the last two weeks. The exchange rate between the Bolivars went from 12.66 Bolivars to the USD on November 28 to nearly 20 Bolivars to the USD on December 28.
In November 2022, the Bolivar lost 40% of its value during an intense depreciation episode. Analysts are now assessing the potential impact this real-time tracking of crypto transactions may have on inflation rates going into 2023.
The nation only recently came out of a 5-year hyperinflationary era that began in 2017. Meanwhile, Jose Guerra, Venezuela’s leading economist on projects, forecasts a 30% rise in the nation’s inflation rate for next month.
Since October, Venezuela’s apex bank hasn’t published official inflation data. Yet, during the first ten months of 2022, prices have increased by nearly 120%.