Honduras Regulatory Body Prohibits Institutions from Engaging in Cryptocurrency Transactions

TEGUCIGALPA (Reuters) – The Commission for Banking and Securities (CNBS) of Honduras has issued a prohibition against the nation’s financial entities from engaging in cryptocurrency transactions and the handling of related digital assets, addressing concerns of potential fraud and money laundering, according to a recently released statement.

The decree by the National Banking and Securities Commission, issued on a previous Monday but disclosed on the following Friday, is to be enforced with immediate effect.

Under the new mandate, all institutions regulated by the CNBS are prohibited from “engaging in operations involving cryptocurrencies, digital assets, virtual coins, tokens, or any comparable forms of virtual assets that have not been issued or approved by the national central bank.”

While Honduran regulations do not currently encompass crypto assets, exchanges that facilitate their trade have been operating within the country’s borders.

The regulatory body emphasized the inherent challenges in overseeing platforms that are headquartered across various international jurisdictions, highlighting the elevated risk they pose for activities associated with fraud, money laundering, and funding of terrorism.

The central bank of Honduras has clarified that it holds no liability for and offers no assurances regarding transactions involving these types of assets.

Previously, in March 2022, the central bank indicated that it was appraising the feasibility from both a technical and legal standpoint for the creation of a national digital currency, which would be subject to regulation and officially accepted as currency. Nevertheless, a definitive resolution on this matter has not been released.

In contrast, Honduras Prospera, a special economic zone with autonomous governance known as a ZEDE, made a declaration in April 2022 to recognize bitcoin as an authorized medium of exchange within its domain.

The impact of CNBS’s recent regulatory stipulations on this ZEDE’s proclamation has yet to be clarified.

(Authored by Gustavo Palencia; Literary contributions by Sarah Morland; Revision by Kylie Madry)