According to a release, the initiative has been introduced with government support and notably marks “a global first” with the use of stablecoins for providing financial relief.
As noted in the announcement, the “unique” private-public partnership, stablecoin solution, and distribution channel represented the “only viable option” available to the Republic to distribute financial relief funds while “avoiding censorship by the Maduro regime.”
Circle claims that it had to deal with a key challenge (earlier this year) when it had to figure out if it could help the legitimate elected government of Venezuela distribute aid to front-line medical workers as they faced COVID-related challenges. In addition to the Coronavirus crisis, Venezuelan residents have had to deal with the crippling effects of hyperinflation and international isolation due to US-led sanctions.
Most of the South American nation’s residents have blamed Venezuela’s economic collapse on President Nicolás Maduro’s terrible policies and massive amounts of money printing. Medical supplies and equipment have not been widely-available as the country’s import/export market has been pretty much destroyed by its worthless national currency and capital controls, the release noted.
Wages that are paid to healthcare professionals are not enough because of hyperinflation, which has made the Bolivar practically worthless. Doctors are now starving and can’t effectively do their jobs due to these unbearable conditions. This has led to a situation where patients are also beginning to starve, which has significantly lowered their immunity levels. There’s also lack of proper and affordable treatment in the country, which has led to more deaths than usual.
As mentioned in the release:
“Through a collaboration with the Bolivarian Republic of Venezuela, led by President-elect Juan Guaido, U.S.-based fintech innovator Airtm, and coordination with the US government, we [Circle Internet Financial] were able to put in place an aid disbursement pipeline that leveraged the power of USDC — dollar-backed, open, internet-based digital currency payments — to bypass the controls imposed by Maduro over the domestic financial system and put millions of dollars of funds into the hands of people fighting for the health and safety of the people of Venezuela. “
South America has reportedly been one of the hardest-hit continents due to COVID. Amnesty International has stated that the number of infections being reported by Venezuela’s authorities is “likely underreported.” There have also been cases where healthcare professionals had reportedly been arrested for trying to speak out about unsafe working conditions since the Coronavirus began earlier this year.
As confirmed in a release by Circle:
“Doctors have been fleeing the country in recent years, and those healthcare workers that remain are grossly underpaid (earning between USD 4 and USD 18 per month) and lacking personal protective equipment (PPE). Donations of PPE are either not reaching the intended recipients or are barely making a dent in the amount that is still required.”
As noted in the announcement, with strictly imposed capital controls, bank receipts are “subject to rigged forex rates, making banks useless for receiving payments, donations and remittances.”
After President Maduro held onto power in January 2019, the US Treasury Department had imposed international sanctions on his administration. This allowed the US government to seize assets that were supposed to belong or to be used by Maduro and his regime.
According to Circle, many organizations have turned to blockchain and Fintech solutions in order to distribute funds to Venezuelan citizens during these unprecedented times.
As explained in the release:
“Seized funds are released 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 supports withdrawals to local fiat currency in Latin American bank accounts at “free market (vs. government-rigged) rates.” The announcement also mentioned that after the USDC has been received on Airtm wallets, it is then transferred to the accounts of Venezuela’s healthcare professionals as AirUSD (Airtm’s stablecoin-backed dollar token).
The workers can then make withdrawals to their 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.”