Venezuela's launch of what is the first state-sponsored digital token will not be able to bypass U.S. sanctions on the oil-producing nation.

U.S. President Donald Trump on March 19 issued an executive order banning the purchase of cryptocurrencies sold by the Venezuelan government. In February, the government launched the petro, which a number of observers have argued was an attempt to avoid U.S. sanctions. The Venezuelan government said the petro is backed by the country's crude oil and other commodities.

Although it is unclear if sidestepping the sanctions was Venezuela's intent, Jill Carlson, an independent blockchain consultant, said thinking such a scheme would work would have been "extremely naive." Regardless, she said the petro is a "good wake-up call" to those working in the cryptocurrency industry and developing blockchain technology, adding that users can adapt the technology however they can imagine.

Carlson started her career on the Latin American bond trading desk at Goldman Sachs, covering Venezuelan sovereign debt and credit default swaps. She said it feels "somewhat dystopian" to see the Venezuelan government leveraging cryptocurrency technology for its own gain.

The petro seems like "another play in a long line of questionable market practices by the Venezuelan government," Carlson said in an interview.

Some industry experts are not convinced the petro can even rightly be called a cryptocurrency. Carlson, for instance, said she would not call the petro a cyrptocurrency because of the Venezuelan government's involvement. Even though the industry is constantly evolving, a fundamental point of cryptocurrencies is that they are decentralized.

Nick Losurdo, an attorney at Goodwin Procter LLP, said it is unclear what the token represents or if it is truly backed by anything. Rather than being denominated in the Venezuelan bolivar, which has collapsed amid the country's hyperinflation, the petro will instead be pegged to the country's basket of fuel and oil exports.

A 100 million-token issuance of the petro would be equivalent to at least $6 billion, according to a statement by Venezuela President Nicolás Maduro. Maduro recently claimed the government raised $5 billion in the digital token's presale, though the accuracy of that statement has been questioned.

The petro is being issued by a "government that's really failed its people," said one employee at a fintech lending startup who grew up in Venezuela. The employee declined to be identified for fear that the government could retaliate against his family that still lives in the country.

The employee said that there is no demand for the Venezuelan fiat currency, and added that a stable digital currency would be "life changing" for much of the country.

"The situation of the local currency is so bad that people are carrying bags full of cash," he said in an interview. "People are literally starting to weigh money there because the paper is worth nothing."

Venezuela is in an "economic meltdown" caused by a shortage of dollars, hyperinflation and low oil production and prices, according to a recent report from FocusEconomics. The research company expects the nation's economy to contract by an additional 6.7% in 2018. Moody's recently lowered the country's foreign currency and local currency issuer ratings, saying it is "increasingly likely that the government will not be able to meet upcoming principal payments on its market debt."

The fintech employee from Venezuela said the government, which is "starved for debt," is taking advantage of the enthusiasm around cryptocurrency and blockchain technology.

"This is just a way for the government to get access to funding that they desperately need," he said.

Although Venezuela was the first country to officially launch a state-backed token, it is not the first to contemplate such an idea. Carlson, a blockchain consultant, said the others are "very prudent and very conservative," and will take their time launching such a digital token.

"They're aware there are many unanswered questions with regards to the capabilities of the technology, with regards to the implications this would have on their own economy and monetary systems," she said. "They're going to want to have all of those questions answered before moving forward with innovation for the sake of innovation."

Carlson said it will likely "be some time" before any other country makes a serious attempt to follow Venezuela's lead.