I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent news from Honduras as they recently passed a resolution prohibiting the country’s financial institutions from engaging in cryptocurrency-related activities.
National Banking and Securities Commission of Honduras
The National Banking and Securities Commission of Honduras (CNBS) have announced that crypto transactions cannot be guaranteed by the Honduran central bank due to the lack of regulation in the sector and therefore that have prohibited any financial institution within the nation from engaging in cryptocurrency-related activities. This resolution highlights the risks associated with cryptocurrencies and blockchain-based financial services and in particular look to avoid citizens from potential fraud, operational issues, and legal risks. It also places an emphasis on the possibility of cryptocurrencies losing acceptance as a means of payment.
Further concerns have been expressed as part of the resolution regarding the unregulated nature of crypto assets. It was noted how these can be exploited for fraudulent schemes, money laundering, and financing terrorism. The CNBS has mandated that institutions under its supervision must refrain from maintaining, investing, intermediating, or operating with cryptocurrencies.
“Prohibit institutions supervised by the National Banking and Securities Commission from maintaining, investing, intermediating or operating with cryptocurrencies, crypto assets, virtual currencies, tokens or any other similar virtual asset.”
It also noted that supervised institutions are prohibited from holding derivative instruments based on crypto assets. There was also an emphasis on the requirement to incorporate information about the risks associated with crypto assets into financial education programs. They noted that the resolution does not affect the operations of crypto exchanges in Honduras and they can continue to operate without restrictions.
As of its release on the 15th of February 2024, the resolution by the CNBS, as part of the Honduran presidential administration, was unanimously approved. It takes immediate effect from its release date and follows on from the previous warning issued by the Honduras government which had warned about the use of cryptocurrencies in March 2022. This followed on from a report that the nation was considering following in the path of El Salvador, who adopted Bitcoin as their nation currency. At that time the Honduran central bank had expressed interest in studying the possibility of issuing a central bank digital currency.
Despite this set back Honduras has noted a sizeable adoption of Bitcoin within its nation. One of the more notable developments is in Prospera, a special economic zone on Roatan Island. A pioneering step has been taken there by officially recognizing Bitcoin as a unit of account. This means Bitcoin can be used to measure the market value of goods and services. This was led by Jorge Colindres, the acting manager and tax commissioner of Prospera.
Within the imitative they will aim to expand financial and monetary freedom for individuals and businesses operating within the zone. While many technological and regulatory challenges currently prevent the implementation of a “Final BTC Tax Payment Procedure" there has been an outlined process created in the region. They would propose for entities to report tax liabilities in Bitcoin, although they are temporarily reported in U.S. dollars or the Honduran lempira.
There has also been a wider acceptance in the broader Honduran community towards embracing Bitcoin. These include initiatives like the ‘Bitcoin Valley’ in the town of Santa Lucia. Through this project they hope to transform Honduras into a regional hub for crypto investors through encouraging a wide range of businesses to accept Bitcoin as payment. Bitcoin Valley would aim to make the most of the growing interest in crypto assets and make the most of tourism and economic activity which adoption Bitcoin would bring. This is based off the growth seen and experienced by neighbouring El Salvador.
Have a great day.
CryptoGod-1.
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