The Bank of England has reportedly rejected requests from embattled Venezuelan president Nicolás Maduro to withdraw $1.2 billion in gold reserves. The decision follows another turbulent week in Venezuela where opposition leader Juan Guaidó was sworn in as the new interim president.
US President Donald Trump, who recognizes Guaidó as the country’s official leader, has cut all ties with Maduro. According to Bloomberg, US Secretary of State Michael Pompeo and National Security Adviser John Bolton lobbied their UK counterparts to squeeze Maduro by restricting access to overseas assets.
The political conflict highlights one of the main tenets of Bitcoin and other cryptocurrencies. They can’t be seized by banks or controlled by third parties.
As tensions rise between the US and Venezuela, world leaders are taking sides. Lining up with the US, the UK, Germany, France, Brazil, Colombia and Argentina support Guaidó. It appears Spain may be next to support Guaidó as well.
Spanish Prime Minister Pedro Sanchez said Saturday,
“We want democracy and free elections in Venezuela. I want to state absolutely clearly that if within eight days, fair, free and transparent elections are not called in Venezuela, Spain will recognize Juan Guaido as president.”
According to Bloomberg, the Bank of England has declined to comment on the specific nature of the allegations. The bank says it “provides banking services – including gold custody services – to a large number of customers” and “does not comment on any of those relationships.”
Maduro has reportedly been trying to secure $550 million in gold from the Bank of England since last year, following a swap deal with Deutsche Bank.
Embroiled in political turmoil, hyperinflation, US sanctions, and violent clashes between local residents and the police, Venezuela began gold barter operations with Turkey last year in exchange for food.
According to a report by CNBC, when Venezuela repaid Deutsche Bank, its gold assets at the Bank of England increased.
“Its holdings at the bank more than doubled in December to 31 tonnes, or around $1.3 billion, after Venezuela returned funds it had borrowed from Deutsche Bank AG through a financing arrangement that uses gold as collateral, known as a swap, one of the sources said.”
By continuing to withhold Venezuela’s gold, the Bank of England sends a stark message to countries around the world that are also holding traditional assets overseas.
Bitcoin supporters and crypto proponents point out that fiat currency, gold and other traditional assets are obvious bargaining chips, subject to manipulation, seizures, political will, economic objectives and abuse of power.
Jesse Powell, co-founder and CEO of crypto exchange Kraken, tweeted,
On Thursday, Russia warned the US not to intervene with any military action. In lieu of combat, control over massive funds can severely hamper Maduro, limiting his power, reach and ability to regain control of Venezuela.
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