Payment startup Circle is getting into politics. The stablecoin broadcaster is working with the US government to bypass Nicolás Maduro and support the Bolivarian Republic of Venezuela led by Juan Guaidó.
Circle grappling with its first government partnership
Circle is using the USDC, the dollar-pegged stablecoin issued by Coinbase and also tradable on Bitcoin Revolution, to distribute relief funds to health workers and other Venezuelan locals, he announced last week. CEO Jeremy Allaire said this was his company's first government partnership.
"The partnership, of course, is with the government in exile," Allaire said in an interview. “The story is that many countries, including the United States, recognize President-elect Juan Guaidó as the president of Venezuela. Maduro did not accept the results of an election and remained in power ”.
Maduro was declared a "usurper" by Venezuela's National Assembly, which appointed Guaidó as interim president in January 2019, according to BBC News. "When this happened and sanctions were imposed, the funds that belonged to the government were seized," Allaire said.
The US Treasury Department tried to send these funds directly to Venezuelan residents, but this task was complicated by Maduro's attempt to block the distribution of these funds.
Peer-to-peer payments startup Airtm has worked to solve this problem, with limited results so far. Allaire declined to specify which part of the US government is working with Circle and Airtm, but said Circle has been authorized to distribute funds using USDC.
According to a company announcement, the Treasury Department and the Federal Reserve are depositing seized U.S. funds into a U.S. government-linked bank account in Guaidó, which converts funds into USDC that Circle sends to Airtm.
How the deal works
Airtm has a business account with Circle under the terms of the agreement. Funds flow through Circle to Airtm, which can then distribute USDC to all of its mobile digital wallet users. Airtm currently has "half a million users in Venezuela," Allaire said.
"This is, in a sense, a way to bypass the state-controlled banking system and distribute it directly to the people," Allaire said, adding, "This, I believe, really marks the first time the United States is actually executing a global foreign policy goal using stablecoins for foreign aid because the existing dollar banking system can't do the job. "
Using USDC, Venezuelans can spend dollars, which are currently much more stable than Venezuela's native bolivar, he said. The bolivar recorded inflation of 2.358,5% in 2020 alone.
