Payments startup Circle is getting political.
The stablecoin issuer is working with the U.S. government to bypass NicolÃ¡s Maduro and support the Bolivarian Republic of Venezuela led by Juan GuaidÃ³.
Circle is using USDC, the dollar-pegged stablecoin it issues with Coinbase, to distribute relief funds to medical workers and other Venezuelan locals, it announced Friday.
CEO Jeremy Allaire told CoinDesk this was his companyâ€™s first government partnership.
â€œThe partnership, obviously, is with the exiled government,â€ Allaire said in an interview. â€œThe history here is many countries, including the United States, recognize President-elect Juan GuaidÃ³ as the president of Venezuela. Maduro did not accept the results of an election and maintained power.â€
Maduro was declared an â€œusurperâ€ by Venezuelaâ€™s national assembly, which named GuaidÃ³ the interim president in January 2019, according to BBC News.
â€œAs that happened and sanctions were imposed, funds that belonged to the government were seized,â€ Allaire said.
The U.S. Treasury Department has been trying to send these funds directly to Venezuelan residents, but this task has been made difficult after Maduro tried blocking the distribution of these funds. Peer-to-peer payments startup Airtm has been working to solve this issue, with limited results so far.
Allaire declined to identify which part of the U.S. government is working with Circle and Airtm, but said Circle had been licensed to distribute funds using USDC.
According to the companyâ€™s blog post, the Treasury Department and the Federal Reserve deposit funds seized by the U.S. into a bank account in the U.S. tied to the GuaidÃ³ government, which converts the funds into USDC that Circle then sends to Airtm.
How it works
Airtm has a business account with Circle under the terms of the arrangement. Funds flow through Circle to Airtm, which can then distribute USDC to any of its mobile digital wallet users. Airtm currently has â€œhalf a million users in Venezuela,â€ Allaire said.
â€œThis is, in a sense, a way to bypass the state-controlled banking system and just directly distribute to people,â€ Allaire said, adding:
By using USDC, these Venezuelans can spend in dollars, which are currently far more stable than Venezuelaâ€™s native bolivar, he said. The bolivar has seen 2,358.5% inflation in 2020 alone.
Read more: Here in Venezuela, Doctors Struggle to Access Aid From Crypto Platform
Like with Airtmâ€™s previous efforts, all local residents need to receive the stablecoins is a mobile phone and some way of accessing the internet.
â€œIn this case, because itâ€™s a dictatorship, you also have a VPN and you have digital currency. You can go over the top of the internet and bypass those controls,â€ Allaire said.
A representative for the Bolivarian Republic of Venezuela did not return a request for comment by press time.