Honduras’ National Banking and Securities Commission has just banned all cryptocurrency-related activity by financial institutions, arguing high risks to consumers and the financial system.
Honduras bans crypto-related activities at financial institutions
The National Banking and Securities Commission of Honduras (CNBS) adopted February 15, 2024 a resolution prohibiting regulated financial institutions from engaging in cryptocurrency-related activities.
In its resolution, the CNBS highlights several risks associated with these unregulated assets. In particular, it highlights the absence of a central bank guarantee vulnerability to fraud and operational problems, as well as the risk of loss of attractiveness as a means of payment.
The authority is especially concerned about the potential misuse of cryptos for illegal activities. In addition, the CNBS points the finger at the lack of consumer protection. Indeed, high price volatility and the risk of total losses in the event of wallet hacking make cryptos risky for the general public.
It has therefore decided to prohibit financial institutions under its supervision from holding, investing or trading in cryptos and derivatives.
Growing adoption of cryptocurrencies in Honduras despite restrictions
Despite this regulatory stance, Honduras has experienced a significant adoption of cryptos in recent years.
The island of Roatán, for example, is home to the Próspera special economic zone, the country’s first entity to officially recognize Bitcoin as a unit of account. In addition, the Honduras Bitcoin Valley in the city of Santa Lucia seeks to turn the country into a hub for crypto investments.
From many local businesses already accept bitcoin as a means of payment following the example of neighboring El Salvador, whose economy has benefited from the adoption of bitcoin.
Conclusion
Although prohibited within the national financial system, cryptos are gaining in popularity among Hondurans. Attracted by the promise of financial freedom, more and more citizens are looking to profit from them.
Rather than fighting this burgeoning crypto phenomenon, Honduras would benefit from establishing an appropriate regulatory framework, guaranteeing transparency and security without stifling innovation. Such a framework could draw inspiration from models implemented by other countries, while taking into account the specificities of the local ecosystem.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
