Unconstitutional Decrees from ANC and Maduro Regarding Shady Petro

Photo: Supcacven

Ready for more chavismo-sponsored crypto asset insanity?

Last week both the Constitutional Assembly (ANC) and President Maduro issued decrees regarding cryptoactives. As seems to be the rule now, both acted unconstitutionally because those regulating powers belong to the National Assembly. This is a Three Stooges mess, so we’re here to help you shed light into this night of absurdities.

Ok. What do the decrees regulate?

One decree —the constitutional one— sets the basis for crypto asset dealings in Venezuela (including petros), theoretically granting the executive powers to regulate the market. The other —the presidential decree— “creates” the Superintendence of Cryptoassets, SUPCACVEN (weird, since such authority has been acting for some time now). It also uses the “powers” granted by the constitutional assembly to regulate “mining”, exchange houses, virtual intermediation and other activities.

Important restrictions and obligations are imposed, some explicitly. For instance, the presidential decree forces all parties conducting activities with crypto assets to register in the Superintendence. Public authorities and entities must also promote and guarantee the use of cryptocurrencies as means of exchange (“means of payment”) in the public sector. There are also implicit limitations: the wording of both decrees directs parties acting as intermediaries to be authorized to operate by the Superintendence.

Can such decrees impose this type of restrictions?

No.

The Constitution establishes two important rules:

First, individuals and corporations have economic freedom, which entails the right to conduct economic activities freely. The State may impose limits, yes, but they’re imposed by law (i.e. statutes enacted by the legislature), not by other type of rules. Regulations issued by the executive may detail the framework, but a law must be the basis for any limitation.

Whatever their legal nature, cryptos are definitely in the realm of economic stuff and, thus, any regulation must be by established by law.

Second, when referring to crypto assets, we’re talking about economic matters, that must be regulated by law. Understanding the legalese of crypto would require an article of its own, but for the purpose of this one, it’s enough to understand that whatever their legal nature, they’re definitely in the realm of economic stuff and, thus, any regulation must be by established by law.

Legislation in these matters is restricted by Constitutional mandate to the National Assembly. No two ways about it.

Chavismo is self-conveniently arguing that the constitutional assembly has “superpowers”, allowing the takeover of other authorities’ powers. These are, in fact, usurping powers. Again, this is a serious subject deserving its own discussion, but keep in mind that such argument ignores constitutional constraints crucial to democracies.

Let it be clear, fellas: a constitutional decree is not a law, not even a “constitutional law” is a law. Basically, they’re enacted by an authority not empowered to legislate and, since decrees are not laws, any implicit or explicit provision seeking to impede, restrict or limit transactions in cryptoassets is null and void.

These limitations don’t work, got it. But should the State enact valid regulations on cryptocurrency?

SEC’s Chairman, J. Clayton, has made arguments about the need to protect “main street investors” of cryptocurrencies. There’s less protection in that market, he says, than there is in the traditional securities market.

And we agree.

The approach of the U.S. regarding cryptocurrency has been dual: Sometimes they’re securities, sometimes they’re commodities. Two different authorities (SEC and CFTC) have control over each, but the important part is, certain conditions apply.

The authorities think the regulatory framework of the Capital Markets Law does not apply, meaning cryptocurrencies would be ruled by regular civil and commercial laws.

In the case of Venezuela, we don’t have dual regulation. Only the capital market rules could apply, but that doesn’t properly fit cryptocurrencies. Even if cryptocurrencies qualify as securities, the authorities think the regulatory framework of the Capital Markets Law does not apply, meaning cryptocurrencies would be ruled by regular civil and commercial laws.

This probably needs correcting, either by recognizing them as securities subject to control, or by treating them separately, aiming at investors’ protection. We prefer the former.

Woah, okay. Anything else we should know about the decrees?

Oh, many things. But let’s mention two:

The constitutional decree reinforces the illegal “backing” of petros with oil reserves. It authorizes, again, the setting apart of oil reserves to serve as collateral for the “creation and issuance of the Petro.” As we’ve said before, this may be ineffectual in economic terms (and is definitely unconstitutional), with many legal consequences rendering petros illegal.

It also authorizes the creation of a new state-owned entity (Tesorería de Criptoactivos) to, among other things, issue the State’s “crypto assets.” Such entity was created by another presidential decree issued on the same date. More than answers, we have questions: how is this entity going to issue petros, since they’re already issued and —allegedly— partially sold?

The decrees complicate matters on cryptocurrency and don’t solve specific problems created by, and in connection with the petro.

Because this wasn’t chaotic enough.

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24 COMMENTS

  1. Silliness. News, so it is worthy of reporting. But it is pure silliness. Face-palm silly. Eye-roll silly.

    The ANC was supposed to be rewriting the Venezuelan constitution. It has done everything except. (not that the ANC was constitutionally assembled anyway, but I digress)

    Why does anyone even care anymore? Maduro is ruling by dictate. Nothing he does is constitutional. Nothing the ANC does is constitutional. The CNE? TSJ? Unconstitutional.

    Everything that has happened since the elections of 2015 is a fraud. Until there is a semblance of democracy in Venezuela, all of these decrees from the ANC/CNE/TSJ and the Executive are the ramblings of a dictator.

  2. The ANC assembly is NOT constitutional and as such, anyhing they do is NOT constitutional either. This assembly is constituent; which may not be exactly the correct term, but better than constitutional. At least it helps differentiate both.

    • Which is why the first thing that should be done when the chavistas are gone is to declare any agreements made with other governments under their rule are voided. And if the want their money back, go see the chavistas bank accounts.

      • Right. Which is where any IMF money should come from, and all of it carefully audited. That may not sit well with the “Patria Soberana” people, but any money going to a new government gets audited by IMF people to make sure “medical supplies $40,500” does not turn into “miscellaneous entity account, medicines $405,000, Andorra”. Probably how they do that, just add a zero … “Oh, that’s a typo … she has epilepsy and occasionally hits the keys twice when she’s having a seizure … we’ll fix that, don’t worry … we do it all the time”.

        • And over on “The Last Mambi” the “budget proposal” for Venezuela is $60 billion dollars??? B.S.!!! And No. “To maintain the lifestyle it has become accustomed to??” No. To continue to import food of international standards without giving a thought to actually growing it?? No. Make a choice about whether Venezuela prefers day-old garbage, or bowls of rice with some protein bits on the side.

          And get Venezuelan asses busy growing food. Venezuela used to be a net exporter of beef. Goats are really good food, and can be raised easily. Same with sheep. Chickens. Fish. That is ample protein.

          $60,000,000,000?? Down a known rat-hole?? Do some more cocaine. The answer is “No.” Get some capital in to repair the pumps and refineries, recruit the labor from “patriotic Venezuelans who fled the country after allowing it to become a disaster”. Ship the oil, pay for your own way. Recover the stolen money – there’s supposedly $300,000,000,000 there. Stop stealing it.

          $1,000,000,000 buys a hell of a lot of basic medical supplies and minimal nutritional diet. By me, that’s all Venezuela gets “for free”. I hope the IMF charges a 10% finder’s fee for any recovered money. Thrown the Dutch and Americans and others out so you can have all the oil to yourselves, screw it up beyond all recognition, blame it on someone (anyone!), then whine about needing a major global-size fortune to rebuild and import food? And become seriously offended” if some were to even appear to suggest that Venezuela made a major major major mistake for its own greed? Go on, get offended!

          Venezuela either shows some spine and works for itself or it gets nothing. Take an ice-bath.

          • “And get Venezuelan asses busy growing food.” The fact that Vz imports most food is the absolute insanity of klepto-marxism.

            Vz would be an agricultural paradise without the willful destruction of leftists. One early goal in rebuilding the nation must be permanent agricultural independence.

          • Davy Jones – I’m not going to buy the report, https://www.jstor.org/stable/178887?seq=1#page_scan_tab_contents but you can read to the point where it says Venezuela used to export beef to Cuba ca. 1821 (Cuba was a net exporter of agriculture, but specialized in its cash crops), and Venezuela in 1860 had 6,000,000 (six million) head of beef cattle. The population back then – I looked it up once – was less than one-tenth what it is now, but the country currently has something like 600,000 (six hundred thousand) head of cattle. Just a small bit of Googling reveals expropriations and prohibitions on importing necessary supplies for agriculture. And the UN with all their PhD slaves and resources and millions in their budget can’t research this beyond sitting on their cocktail napkins and chatting about the latest trendy restaurant in NYC? “Venysuelo? Isn’t that Maydoro? They need more immigrant diversity, like all of Europe.” And no contributor to CC wants to take me up on doing a report on the history of agriculture in Venezuela, in order to at least hypothesize about how food sufficiency could be achieved within three years. That CAN be done! Not “generations” from now.

          • This is from the USDA Foreign Agriculture Service (didn’t occur to me to ask the U.S. Department of Agriculture for a summary of agriculture in Venezuela): https://www.fas.usda.gov/data/venezuela-livestock-and-products-annual The link is to a PDF file I haven’t read, but may take a look at. My number of 600,000 head currently is totally wrong. Closer is over one million. There is also goat, pig, and chicken ranching, but the conditions of all that now, and the steps necessary to reestablish it are the interesting things and a current report is needed.

  3. “Public authorities and entities must also promote and guarantee the use of CRYPTOCURRENCIES as means of exchange (“means of payment”) in the public sector.” Does this mean all cryptocurrencies? Or just the Petro?

  4. It seems to me that Maduro’s, “Young Geniuses,” have put him between the proverbial rock and hard place. He has two choices:

    1) He supports the Petro, in which case he dollarizes the economy (1 PTR = 1bbl. oil = $60 +/-).

    2) He creates Petros out of thin air with no support (ie:, no way to trade them for real money) in which case they become worthless (Oh, Yeah! That bbl. of oil 1kilometer under the cow pasture).

    He will, no doubt, do 2), but try to make it look like he is doing 1). He will fool no-one. The Petro is doomed.

      • Gringo—not sure of the reason for the link. I am not familiar with the website but I read it as follows: paragraphs 1-15 (guessing) as a rehash of previous reporting on Venezuela with a few quotes I have not read. The final 5 (again guessing): the US should return to the gold standard and by the way did I mention (no I did not), I own gold futures. Not sure of the relevance.

        • Waltz – Only that there are people in the world who are paying attention and are publishing. There were some comments a few months ago that the average American doesn’t even know where Venezuela is on a map, and could care less about the situation. The link was just another response to that.

  5. Authors, don’t worry about legalities, the TSJ will declare all Govt. actions legal, anyway (anybody asking anymore what happened to the 3 Amazonas Congressional deputies duly democratically elected??). As for the Petro, don’t be surprised if Carnet De La Patria holders get a Petro or fraction thereof for voting correctly in the coming Pres. election (“Pueblo, USTEDES son duenos de su riqueza petrolera, que la Burguesia Rancia y los Gringos Opresores Del Imperio Norteamericano se la quieren quitar!).

  6. The constitution literally and categorically designates Venezuelas oil deposits as ‘inalienables’ and ‘imprecriptibles’ so that they cannot be sold , disposed of , mortgaged or pass to the hands of anyone except that to the extent the oil in such deposit is taken out of the deposit it can be sold by Pdvsa and only by Pdvsa according to the Oil Reserve Law , any decree therefore which has them become the support of any crypto currency is unconstitutional and legally unenforceable . What they are doing is issuing decrees which de facto derogate the relevant constitutional provisions and implicitly replaces them with new ones ……..!! You will not find two lawyers who in good conscience can consider such decree as valid ,

    • You had up all the way to “You will not find two lawyers who in good conscience can consider such decree as valid”

  7. Because the ANC is not a representation of the people could participants say that those contracts are null and void based on the ruling of the IMF?

    Inquiring minds want to know.

    • Not because they are not representatives of the people but because the constitution establishes how itself can be legally changed. This procedure was not followed, ergo anything the ANC says/does is invalid.

  8. Breaking, don’t know the best place to post this:
    Something like:
    The president ordered Petróleos de Venezuela (PDVSA) and the ministers for oil and transport to get the payments for aviation fuel from international airlines, in the Venezuelan cryptocurrency.

    https://maduradas.com/sepalo-gobierno-vendera-gasolina-a-aerolineas-en-petros/
    “Toda la gasolina que se venda a los aviones en dólares, de servicios internacionales (…), toda la gasolina debe venderse en petro, toda a partir de ahora”, expresó [Maduro].

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