Sam Altman-backed stablecoin Reserve stops key services in Venezuela and five other nations due to regulatory challenges
US-based stablecoin company Reserve has announced the suspension of local currency deposit and withdrawal services in Venezuela and five other Latin American countries. The move comes as US crypto firms face increased difficulty in offering financial services. Reserve executive Gabriel Jiménez stated the company is working to establish a more sustainable operating model in Latin America, including obtaining a license from the US Treasury Department. Despite this, Reserve plans to launch a new model in partnership with banks in the US and internationally to handle currency conversion, discerning it as a more stable long-term solution. Jiménez believes the firm will be able to offer more secure services in Venezuela and globally in the near future with cooperation from the US government.
Reserve found success with its app in Venezuela, which allowed users to transfer between fiat currency and its proprietary stablecoin. It amassed approximately 500,000 users and 26,000 merchants who accepted Reserve as a form of payment. However, the firm faced opposition from Venezuelan crypto regulators, who sought to ban promotion of the app, and the US government, which has restrictions on US-based financial firms offering services to Venezuelan government employees. Reserve cannot onboard high-ranking government officials, but has more flexibility with lower-level employees after securing a key license from the US Treasury Department’s Office of Foreign Asset Control last week.
Reserve is temporarily suspending its fiat on- and off-ramps in Venezuela and other Latin American countries, pending the establishment of partnerships with local banks. The company is planning to eliminate its decentralized model of currency conversion and work with banks instead. It aims to launch the new model with banking partners in the US in Q4 2023. However, Reserve will have to navigate regulatory challenges in Venezuela, following a recent temporary ban on crypto mining imposed by the government. Jiménez stated that the company’s focus is on using crypto as a means to support financial autonomy and remittances, rather than as an end goal.