The Honduras financial regulator has banned the country’s financial system from trading in cryptocurrencies and similar virtual assets with immediate effect. The National Banking and Securities Commission cited concerns over money laundering and fraud.
The National Banking and Securities Commission (CNBS) of Honduras banned the country’s financial system from trading in crypto and other related virtual assets with immediate effect. The resolution, dated Monday, February 19, was made public on Friday, February 16, 2024.
Honduras Law Does Not Currently Regulate Crypto Assets
Honduras’ CNBS regulation banned the Central American country’s financial system from trading in cryptocurrencies and other related digital assets. In a resolution, the CNBS named fraud and money laundering risks as the reason for its decision. The resolution further explained that the ban takes an “immediate effect.” According to the resolution, users of crypto and other financial services based on blockchain technology may be exposed to operational and legal risk, “including that their acceptance could cease at any time since people are not legally obliged to transact or recognize them as a means of payment.”
The country’s central banks said they cannot guarantee crypto transactions because they are currently unregulated. Given they are unregulated, cryptocurrencies are liable to be used for fraud, money laundering, and terrorist financing.
According to a report by Reuters, the resolution bans institutions under its supervision to “maintain, invest, intermediate or trade in cryptocurrencies, crypto-assets, virtual currencies, tokens, or any similar virtual assets not issued or authorized by the central bank.”
Although Honduran law does not currently regulate crypto assets, platforms trading in them do operate in the country. According to the watchdog, many of these trading platforms are domiciled in multiple jurisdictions, so Honduran law cannot regulate them, and they risk “lending themselves to activities of fraud, money laundering, and terrorist financing.”
Resolution Bans Institutions from Holding Crypto Derivative Instruments
The resolution further forbids supervised institutions from holding crypto-based derivative instruments and says the dangers of crypto must be included in financial education programs.
While crypto exchanges operate in the country, Honduras launched a “Bitcoin Valley” in its tourist town of Santa Lucia. Almost 60 businesses in the town accept Bitcoin as payment as the Central American country tries to attract crypto investors from different parts of the world.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
