Political crisis and economic disaster have pushed the US to use the USDC stablecoin as a tool for foreign aid. This news coincides with the US providing support and returning seized funds from Venezuela to Juan Guaido’s government to pay health workers amidst the coronavirus pandemic.
The health aid will be issued in USDC stablecoin with the help of Circle, Coinbase, and Latin America’s Airtm. US health aid to Venezuela is being paid in the stablecoin due to the political crisis rocking the Latin American nation. Venezuela has a very complex political situation, further complicating matters.
Nicolas Maduro is Venezuela’s president in one camp. He has been ruling the country since 2013, while Juan Guaido has been the president in the other camp since 2019. Guaido is recognized internationally as Venezuela’s president by over 50 countries, including the US. Hence, the US aims to fund Guaidos’s administration, especially since slapping Maduro’s government with a series of sanctions.
In response to these US sanctions, Maduro blocked Guiado’s access to cash, forcing his opponent’s ally – the US – to provide aid. In this case, that will happen in the form of the USDC stablecoin.
How the US Will Fund Venezuelan Healthcare with USDC
Primarily, the US Treasury and Federal Reserve can release seized funds to Guaido’s government by using a US bank account. The Guaidó government can then use those funds to mint USDC, which is then transferred to Airtm. This creates a new bond between the US and Latin America.
When Airtm gets the digital asset, Venezuelan healthcare workers are paid in AirUSD, Airtm’s fiat-backed stablecoin.
When recipients are paid, they can withdraw at banks, send money to others, or spend it online. This way, regulations imposed by Maduro on domestic financial systems are going to be bypassed.
Alejandro Machado, founder of the Open Money Initiative and head of research at the Bitcoin-powered remittance app Valiu, appreciates this new approach. In his opinion, it helps Venezuelans better control their money. Moreover, this approach is beneficial to healthcare workers fighting a pandemic.
The US has been funding Venezuelan healthcare workers for some time; however, getting the funds to Venezuela was a problem.
Although Guiado’s government had access to Venezuela’s funds and assets in the US, multiple alternative means were explored. Adding USDC to the list of options may create new perspectives.