The Trump administration issued a new Executive Order (EO) yesterday prohibiting all transactions related to and other dealings in any digital currency, digital coin, or digital token issued by, for, or on behalf of the Government of Venezuela after January 9, 2018.

The U.S. government previously imposed targeted restrictions on dealings in new debt, new equity, bonds, dividend payments/distributions of profits, and securities involving the Government of Venezuela, including agencies or instrumentalities thereof (e.g., Petroleos de Venezuela, S.A.). The latest move to ban U.S. trade in Venezuelan government digital currencies is in response to President Nicolas Maduro’s pronouncements regarding the issuance of the petro (a digital currency backed by oil) and petro gold (a digital currency backed by precious metals) as means to avoid U.S. financial sanctions. U.S. persons who participated in a pre-sale for covered Government of Venezuela-issued digital currency are out of luck and now require U.S. government authorization to sell, trade, or use such currency.

Concurrently with the EO, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) also issued broader guidance on virtual currency. The agency reminded U.S. persons that their compliance obligations for transactions involving digital currency—which the agency defines as sovereign cryptocurrency, virtual currency (non-fiat), and a digital representation of fiat currency—are the same as those for transactions denominated in traditional fiat currency. In other words, regardless of the currency involved, U.S. persons are required to ensure that they do not engage in unauthorized transactions, such as dealings with individuals or entities on OFAC’s Specially Designated Nationals (SDN) List or entities 50% or more owned by SDNs. This requires digital currency users, technology companies, and payment processors to adopt risk-based compliance measures, including screening against U.S. government sanctions lists. To aid the digital currency community, OFAC stated that it may add digital currency addresses to its SDN List, although it warned that the address listings likely will not be exhaustive, placing the onus on U.S. companies and individuals to conduct due diligence to make sure that they are not engaging in prohibited transactions.