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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Another Oil-Backed Cryptocurrency Launches

New York-based investment and holding company Signal Capital Management said on Monday that it had launched a cryptocurrency backed by oil and gas reserves in what it says is the “world’s first globally compliant” oil-backed digital currency.

The new digital currency, PetroDollars, will be backed by the underlying value of recoverable reserves of crude oil and equivalents such as natural gas and condensates, and related assets.

This is not the first oil-backed digital currency in the works, not counting Venezuela’s El Petro cryptocurrency attempt to skirt U.S. financial sanctions.

In December 2017, a team of banking and technology managers and former U.S. regulatory commissioners said that they were launching the world’s first regulatory compliant cryptocurrency backed by a physical asset—OilCoin, which would be based on oil reserves.

Now PetroDollars—“a globally compliant digital reserve currency” as its proponents bill it—is undergoing a regulatory-compliant private placement of PetroDollars tokens to accredited U.S. and foreign investors, Signal Capital Management says.

A global initial coin offering (ICO) is expected to take place in late 2018 and to be up to US$700 million in size, one of the largest ICOs to date, Signal Capital Management said.

After the ICO, “each of the projected PetroDollars tokens in circulation in the year following the ICO will be backed by more than 10 barrels of oil equivalent of proved, probable, and possible recoverable oil and gas reserves, certified by a third party independent petroleum engineering firm,” said the firm launching the new cryptocurrency.

According to its creators, PetroDollars is expected to be in the top 20 cryptocurrencies by total market value. It will be exchangeable for major world currencies and other cryptocurrencies. PetroDollars tokens will be nominally hard-capped at 500 million tokens, according to the White Paper of the new oil-backed digital currency.

By Tsvetana Paraskova for Oilprice.com

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  • John Brown on March 12 2018 said:
    LOL! These Crypto currencies are so bogus. National currencies these days are backed by the economies of the nation's that issues them. In the case of a Socialist Paradise like Venezuela with an economy mismanaged and nearly destroyed by a corrupt socialist Government their currency become nearly worthless because their GNP is dropping like a rock as they print more and more Bolivars. So Maduro comes up with El Petro. Well why would anybody have anymore confidence in Venezuela's crypto currency backed by the countries oil and gold, than they do with the Bolivar which is backed by the countries oil and gold? What is do keep Maduro from inflating El Petro, and how do you get your oil or gold when you want or need it. The reality is that El Petro isn't any better than the Bolivar, except its a crypto currency which seems to be the current Fad.
    So now we have Signal Capital Management creating it own crypto currency backed by its oil reserves. Well that's all well and good but keep in mind its only value is the word, trust, and value of Signal Capital Management. So what happens to that crypto currency if Signal suddenly runs into a Deep Water Horizon type situation? Its dealing in oil, so an massive oil spill, tanker explosion etc could always happens. What happens if an Enron situation develops? Keep in mind that Enron was considered as good as gold, until suddenly it wasn't. What if the SEC & FBI walk into their corporate HDQ one day and arrest and perp walk out all the top management, and freeze most of their assets. What happens if there's a recession and they file for Bankruptcy protection? Personally I'd rather hold dollars, Euro's, Yen, or Yuan. If a company takes a big hit I can always buy from someone else. If Signal takes a hit or goes down who will accept their crypto currency? You can probably line up in bankruptcy court but why would you take on that risk? I honestly don't know. Maybe someone could right an article explaining why anybody would gamble on a crypto currency, instead of say, the dollar if they are in the oil business.

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