As Inflation Hits 229%, Venezuela Turns to USDT Dollarization

- Hyperinflation and bolívar devaluation push households and businesses toward Tether (USDT). - Stablecoins now anchor daily transactions in a volatile economy. Venezuela is undergoing a profound shift toward de facto dollarization. With annual inflation hitting 229% as of October 1, 2025, Tether (USDT) has emerged as a practical alternative to the collapsing bolívar. On October 1, Cointelegraph reported that this unprecedented economic reality drives merchants and consumers to rely heavily on USDT for everyday transactions. The adoption of USDT has effectively created a “digital dollar economy,” where P2P exchange rates on platforms such as Binance serve as the de facto benchmark for pricing goods and services. Powered by the TRC-20 blockchain, known for its low transaction fees, this system allows merchants to use USDT to safeguard their purchasing power, abandoning bolívar pricing that requires constant updates due to hyperinflation. USDT is now ingrained in the financial practices of Venezuelan households and businesses alike. Families use the stablecoin for routine expenses including groceries, rent, and utilities, while small and medium-sized enterprises depend on it for working capital and inventory management. Many businesses convert USDT to bolívars only when essential—for payroll, taxes, or utility payments. Meanwhile, some employers have begun offering partial salaries or bonuses in USDT to stabilize employee earnings in the face of bolívar volatility. A scarcity of physical U.S. dollars, a consequence of economic sanctions and dwindling oil revenues, has further propelled the rise of digital dollars. Although the Venezuelan government tolerates stablecoins in private transactions, it has not officially endorsed dollarization. This unofficial currency system operates across three exchange rates: the Central Bank of Venezuela’s official rate, a parallel market rate, and the P2P rate, the last of which is more widely used due to its real-time accuracy and market-driven liquidity. Nevertheless, reliance on Tether introduces potential risks, as intraday exchange rate volatility, digital wallet security vulnerabilities, and dependence on third-party platforms present challenges. Fraud concerns remain significant in P2P and over-the-counter transactions, and regulatory uncertainty surrounding stablecoin usage compounds these risks. For instance, intermittent blocks on Binance in Venezuela during August 2024 highlighted the precariousness of platform dependence. Despite these obstacles, stablecoins have become a financial lifeline in Venezuela’s inflation-stricken economy, as on-chain data from 2024 indicates that overall crypto activity in the country nearly doubled compared to the previous year. Stablecoins accounted for 47% of transactions under $10,000. According to CoinMarketCap on October 1, Tether (USDT) was trading at $1.001 as of 18:14 UTC, reflecting a 0.068% change in 24-hour trading volume. Concurrently, TRON (TRX), which facilitates these USDT transactions via the TRC-20 blockchain, traded at $0.341, representing a 2.313% increase in its 24-hour trading volume.