Honduras Regulator’s Ban on Crypto Transactions in Banks

Honduras has recently announced a resolution issued by its National Banking and Securities Commission (CNBS) that bans the use of cryptocurrencies by financial institutions in the country. The resolution was prompted by the fact that the country’s central bank cannot ensure the security and regulation of crypto transactions. Due to the unregulated nature of cryptocurrencies, users are exposed to various risks such as fraud and legal complications. These assets can be exploited for illegal activities like money laundering and terrorism financing.

As a result, the CNBS has taken the decision to prohibit supervised institutions from engaging with cryptocurrencies, including maintaining, investing, intermediating, or operating with such assets. The ban also extends to derivative instruments based on cryptocurrencies. The resolution states that the dangers associated with crypto assets must be included in financial education programs to raise awareness among the public.

It is important to note that crypto exchanges are currently operating freely in Honduras. The CNBS, which is a part of the Honduran presidential administration, released the resolution on February 15, with immediate effect. The decision was unanimous among the members of the commission.

This resolution comes after the Honduran central bank issued a warning in March 2022 regarding the use of cryptocurrencies. Reports had surfaced suggesting that Honduras might follow El Salvador’s footsteps in adopting Bitcoin as legal tender. The central bank also mentioned its ongoing exploration of the possibility of issuing a central bank digital currency.

Despite the ban, it is worth mentioning that Bitcoin has made some progress in Honduras. The country is home to Bitcoin Valley, a project launched in the summer of 2022 aimed at attracting tourists who can make payments using Bitcoin, USD, or the Honduran lempira. The island of Roatan is home to Próspera, a special economic zone where Bitcoin was made legal tender in 2022 and recognized as an accounting unit in January.

It remains to be seen how the CNBS resolution will impact these areas where cryptocurrencies have gained some traction. The ban reflects the cautious approach taken by the Honduran authorities towards the use of digital assets within the financial sector.