Venezuela launches the petro, a state token it says is backed by oil reserves

Venezuela has started a presale of the petro, a government-issued digital token that officials say is backed by the country's oil reserves.

The launch comes as the economy suffers from hyperinflation, shortages of basic goods and a collapsing bolivar. US sanctions restrict the ability of American persons to buy new Venezuelan government debt, and the petro is widely seen as an attempt to raise money outside those constraints.

Many questions remain about how the token works in practice. It is not clear how holders could redeem the petro for oil, and independent observers have found little detail on the technical design. The US Treasury has warned that buying the token could expose investors to sanctions risk.

The project matters beyond Venezuela for several reasons:

• It is one of the first attempts by a national government to issue its own crypto-style asset
• It tests whether digital tokens can be used to route around financial sanctions
• It shows how the language of crypto can be adopted by states, not only by those who oppose state control of money

Opposition politicians in Venezuela have questioned the legality of the token. For now, the petro looks less like a working currency and more like a political statement about sanctions and financial independence.