Venezuela issues decree forcing Bitcoin miners to register

A representative of the Venezuelan government said that Bitcoin miners must register with the state.

Some believe that cryptocurrency could be a solution to Venezuela's financial crisis. Earlier this month, President Nicolás Maduro announced that the country would issue its own cryptocurrency called "Petro," which would be pegged to commodities such as gold, oil, and gas. At a meeting on December 12, 2017, Carlos Vargas, director of the Venezuelan Cryptocurrency Corporation, told the media that the government plans to set up a miner registration department.

"We want to know who they are, we want to know where they are, we want to know what equipment they are using," Vargas said.

The mandatory registration platform will go online on December 22.

Prior to the announcement, on December 9, Lara state authorities raided a warehouse in Barquisimeto. They seized 21 mining rigs and arrested 31-year-old Daniel Andrés. He was subsequently charged with money laundering and illegal profiteering, computer crime, financing fraud, and damage to the national grid.

In an official statement, the police no longer equivocated on the legality of cryptocurrencies, saying:

“Digital currency is not recognized by any country’s banking institutions, nor has it been approved by any country. The marketization of digital currency appears to be legal, but in fact it is operated in secret.”

The arrest comes at a time when Venezuela’s economy is in deep crisis. Hyperinflation of the bolivar has forced government experts to begin evaluating the feasibility of issuing mandatory executive orders as a last resort. In stark contrast to the bolivar’s lowest point, cryptocurrencies like Ethereum and Bitcoin continue to hit new all-time highs. The continued growth of this market could be a catalyst for greater regulation by the state as it strives to maintain economic balance.

Angel Salazar, founder of OnixCoin, an advisor to the Venezuelan government on cryptocurrency regulations, expressed optimism about the miner registration system.

“Miners are currently working under difficult conditions and this registration will help protect them from extortion and harassment.”

However, some people disagree. David Fernando López Torres, who once owned a mining company in Venezuela but later opened a shop in San Francisco, said:

"If the government does not protect the rights of miners when there is no registration system, who can believe that the government will really protect the rights of miners when there is a registration system?"

He predicted miners would ignore registration requirements and take extra protective measures to operate underground.

Among all the possible reasons for evading the authorities, one is police extortion. In fact, mining in Venezuela is not illegal unless you are suspected of energy theft or financing terrorism. Apart from the above two reasons for arrest, other legal activities should be protected by the government.