The National Banking and Securities Commission of Honduras (CNBS) has passed a resolution prohibiting the country’s financial institutions from engaging in cryptocurrency-related activities.
The CNBS stated that crypto transactions cannot be guaranteed by the Honduran central bank due to the lack of regulation in the sector. The resolution highlights the risks associated with cryptocurrencies and blockchain-based financial services, including potential fraud, operational issues, and legal risks. It also emphasizes the possibility of cryptocurrencies losing acceptance as a means of payment since they are not legally recognized.
Honduras Voices Concern About Unregulated Nature of Crypto
The resolution further expresses concerns about the unregulated nature of crypto assets, which can be exploited for fraudulent schemes, money laundering, and financing terrorism. As a result, the CNBS has mandated that institutions under its supervision refrain from maintaining, investing, intermediating, or operating with cryptocurrencies. Additionally, supervised institutions are prohibited from holding derivative instruments based on crypto assets. The resolution also emphasizes the need to incorporate information about the risks associated with crypto assets into financial education programs.
It is important to note that the resolution does not affect the operations of crypto exchanges in Honduras, which continue to operate without restrictions. The CNBS, as part of the Honduran presidential administration, unanimously approved the resolution, which takes immediate effect as of its release on February 15, 2024. Honduras had previously issued a warning about the use of cryptocurrencies in March 2022 when reports surfaced that the country might adopt Bitcoin (BTC) as legal tender, similar to El Salvador. The Honduran central bank had expressed interest in studying the possibility of issuing a central bank digital currency at that time.
Honduras Sees Growing Bitcoin Adoption
Despite the regulatory stance, Honduras has seen some adoption of Bitcoin within its borders. One of the most notable developments is in Próspera, a special economic zone on Roatán Island, which has taken a pioneering step by officially recognizing Bitcoin as a unit of account, allowing it to be used to measure the market value of goods and services. Spearheaded by Jorge Colindres, the acting manager and tax commissioner of Próspera, the initiative aims to expand financial and monetary freedom for individuals and businesses operating within the zone.
Moreover, the broader Honduran community is embracing Bitcoin through initiatives like the ‘Bitcoin Valley’ in the town of Santa Lucia. This project aims to transform Honduras into a regional hub for crypto investors by encouraging a wide range of businesses to accept Bitcoin as payment. Bitcoin Valley seeks to capitalize on the growing interest in crypto assets, following in the footsteps of neighboring El Salvador, which has seen a significant increase in tourism and economic activity following its adoption of Bitcoin as legal tender.
In conclusion, while the CNBS has implemented regulations prohibiting financial institutions from engaging in cryptocurrency-related activities due to concerns about risks and lack of regulation, Honduras continues to see pockets of Bitcoin adoption and experimentation. The recognition of Bitcoin as a unit of account in Próspera and initiatives like Bitcoin Valley demonstrate that there is still interest in exploring the potential benefits of cryptocurrencies in certain regions of the country. It remains to be seen how these contrasting developments will shape the future of crypto in Honduras.
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