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Honduras Tightens Crypto Regulations, Prohibits Bank Transactions and Holdings

The Honduran National Banking and Securities Commission (CNBS) has approved a measure barring financial institutions in the country from participating in activities involving cryptocurrencies.

According to the CNBS, the absence of regulatory frameworks in the sector prevents the Honduran central bank from ensuring the security of crypto transactions.

The resolution underscores concerns regarding the risks inherent in cryptocurrencies and blockchain-based financial services, such as susceptibility to fraud, operational challenges, and legal uncertainties.

Moreover, it stresses the potential decline in the acceptance of cryptocurrencies as a valid form of payment due to their lack of legal recognition.

Honduras Voices Concern About Unregulated Nature of Crypto

The resolution underscores concerns regarding the unregulated nature of crypto assets, which could potentially be exploited for fraudulent activities, money laundering, and terrorist financing.

In response, the CNBS has mandated that institutions under its supervision refrain from any involvement with cryptocurrencies, including maintaining, investing, intermediating, or operating with them.

The prohibition extends to holding derivative instruments based on crypto assets.

Furthermore, the resolution highlights the importance of integrating information about the risks associated with crypto assets into financial education programs.

It’s crucial to highlight that the resolution does not impact the operations of cryptocurrency exchanges in Honduras, which are allowed to continue operating without restrictions.

The resolution, unanimously approved by the CNBS as part of the Honduran presidential administration, came into immediate effect upon its release on February 15, 2024.

Honduras had previously issued a cautionary statement about the use of cryptocurrencies in March 2022, amidst speculations that the country might follow in the footsteps of El Salvador by adopting Bitcoin (BTC) as legal tender.

During that time, the Honduran central bank had expressed interest in exploring the potential issuance of a central bank digital currency.

Honduras Sees Growing Bitcoin Adoption

Despite the regulatory stance, Honduras has witnessed some adoption of Bitcoin within its territory.

A significant development has occurred in Próspera, a special economic zone located on Roatán Island, where Bitcoin has been officially acknowledged as a unit of account. This recognition permits its use for assessing the market value of goods and services.

Led by Jorge Colindres, the acting manager and tax commissioner of Próspera, this initiative seeks to enhance financial and monetary freedom for individuals and businesses operating within the zone.

Despite facing technological and regulatory hurdles that currently hinder the implementation of a “Final BTC Tax Payment Procedure,” the zone has devised a method for entities to declare tax liabilities in Bitcoin, albeit temporarily denominated in U.S. dollars or the Honduran lempira.

Furthermore, the wider Honduran community is embracing Bitcoin through initiatives such as the ‘Bitcoin Valley’ situated in the town of Santa Lucia.

This endeavor aims to position Honduras as a regional center for crypto investors by encouraging various businesses to accept Bitcoin as a form of payment.

Bitcoin Valley seeks to leverage the growing interest in crypto assets, mirroring the success of neighboring El Salvador, which has experienced a notable surge in tourism and economic activity subsequent to its adoption of Bitcoin as legal tender.

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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