Global: Honduras Regulatory Body Prohibits Banks from Dealing with Cryptocurrencies

Honduras Regulatory Body Prohibits Banks from Dealing with Cryptocurrencies
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The National Banking and Securities Commission of Honduras (CNBS) has enacted a resolution prohibiting financial institutions in the country from engaging with cryptocurrencies. Citing concerns over the lack of regulation and the potential risks associated with crypto transactions, the CNBS asserted that it cannot guarantee the security of such transactions.

The resolution emphasizes that users of cryptocurrencies and blockchain-based financial services may face fraud, operational, and legal risks, including the risk that their acceptance as a means of payment could cease abruptly. Additionally, due to the unregulated nature of crypto assets, they are susceptible to misuse for activities such as fraud, money laundering, and financing terrorism.

Hence, the CNBS resolution explicitly prohibits institutions under its supervision from maintaining, investing, intermediating, or operating with cryptocurrencies, crypto assets, virtual currencies, tokens, or any similar virtual assets. The supervised institutions are also barred from holding derivative instruments based on crypto assets.

To further address the risks associated with crypto assets, the resolution mandates the inclusion of information about these dangers in financial education programs. It’s worth noting that, despite this regulatory stance, crypto exchanges continue to operate freely in Honduras.

This resolution, unanimously approved and effective immediately as of February 15, reinforces the Honduran regulatory authority’s cautious approach toward cryptocurrencies. While the central bank had issued a warning in March 2022 regarding the use of crypto, the recent resolution establishes a comprehensive ban on financial institutions’ involvement with digital assets.

Honduras has witnessed some engagement with Bitcoin, notably with the establishment of Bitcoin Valley and the adoption of Bitcoin as legal tender in the special economic zone of Próspera on the island of Roatan. The impact of the CNBS resolution on these specific areas remains uncertain.

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