Blockchain giant Circle obtains US government permission to use USDC to distribute aid to Venezuelan residents

The announcement stated that this move bypasses the control exerted by Maduro on the domestic financial system. Stablecoin solutions and distribution channels are the only viable options for the allocation of funds in the Republic of Venezuela, which will help alleviate local hyperinflation and economic collapse. It also marks the first time that global foreign policy has used stablecoins as foreign aid.

Chief executive Jeremy Allaire said it was the first time the company had worked with a government.

Allaire said in an interview:

“Historically, many countries, including the United States, have recognized Juan Guaidó as the president of Venezuela. Maduro has not accepted the election results and remains in power.”

According to BBC News, Venezuela's National Assembly appointed Guaido as interim president in January 2019 and declared Maduro a "usurper."

"With this incident and the sanctions that were imposed, funds belonging to the government were forfeited," Allaire said.

The U.S. Treasury has been trying to send those funds directly to Venezuelan residents, but Maduro has made that task difficult by trying to block their distribution.

Peer-to-peer payments startup Airtm has been working to address this problem, with limited success so far.

Allaire declined to say which part of the U.S. government is working with Circle and Airtm, but said Circle has received permission to distribute funds using USDC.

Under the terms of the agreement, Airtm has a business account with Circle. Funds flow through Circle to Airtm, which can then distribute USDC to any mobile digital wallet user. Allaire said Airtm currently has 500,000 users in Venezuela.

“In a sense, it’s a way to bypass the state-controlled banking system and distribute it directly to the people,” Allaire said.

“I think this marks the first time that the United States has effectively pursued its foreign policy objectives around the world while stabilizing foreign aid, because the existing dollar banking system just can’t do the job.”

He said that by using USDC, Venezuelans can spend with U.S. dollars, which are currently much more stable than Venezuela's local currency, the Bolivar.

In 2020 alone, the bolivar's inflation rate reached 235.5%.

All local residents need to have access to stablecoins is a mobile phone and some form of internet access.

"In this case, you can use a VPN. You can go across the internet and bypass these controls," Allaire said.