Banks in the Republic of Honduras are forbidden from engaging in cryptocurrency transactions, according to a decree from the Honduras National Banking and Securities Commission (CNBS)—a move that places the country at odds with the growing trend of cryptocurrency acceptance in Latin America and beyond.
A CNBS circular, issued last week and signed by CNBS president Marcio Giovanny Sierra Discua, explains that the country’s government implemented the ban to protect the financial system and the public, given the legal voids surrounding the technology.
“Cryptocurrencies, crypto assets, virtual currencies, and any other similar digital asset, are not regulated, issued, or controlled by the Central Bank of Honduras [but] are used as financial assets and their use as a means of payment or investment instruments in the national territory is carried out under the responsibility and risk of those who carry out such operations,” the document reads.
The ban prohibits financial and insurance institutions to “maintain, invest, intermediate, or operate with cryptocurrencies, cryptoassets, virtual currencies, tokens or any other similar virtual currencies” not issued in or by the country.” The document also prevents those institutions from offering services to those dealing with cryptocurrencies and the trading of derivatives like crypto ETFs.
The regulator meanwhile demands that institutions work on the creation of an education plan to “inform about the potential risks of using cryptocurrencies, crypto assets, virtual coins or any other similar virtual assets.”
This regulatory action starkly contrasts with the crypto-friendly policies emerging in the region.
Its neighbor, El Salvador, has declared Bitcoin as legal tender and legalized the use of all “digital assets” as means of payment.
Argentina, under its new president Javier Milei, is expected to pursue a crypto-friendly approach, despite Milei’s inconsistent opinions on Bitcoin. His view has swung from considering Bitcoin and all cryptocurrencies as fiat substitutes with no value to praising Bitcoin as a natural response from the private sector to accusing proponents of promoting crypto ponzi schemes.
Venezuela has a legal system that recognizes cryptocurrencies as means of payment, and Brazil also passed a bill to legalize crypto payments and is the country with the most crypto ETFs being traded in the national stock exchange.
The Honduras ban on derivatives is also notable given the U.S. approval, on January 10, of 11 spot Bitcoin ETFs, which fueled a robust recovery in Bitcoin’s market price and a spike in the whole crypto market, which saw its total market cap rise from $1.7 to $2 trillion.
Across the Pacific, Japan has recently approved crypto assets as viable investments for venture capital firms. This legislative change—part of Japan’s “new capitalism” policy under Prime Minister Fumio Kishida—is aimed at actively cultivating the country’s web3 industry, bolstering the strategic investment environment and supporting local startups.
On February 16, 2024, the Japanese cabinet approved the inclusion of cryptocurrencies among the assets that local investment limited partnerships (LPS) firms are permitted to acquire or hold.
Japan’s legislative action comes shortly after the country’s top financial regulator, the Financial Services Agency (FSA), proposed measures to crack on crypto P2P trading activities by ”stopping transfers to crypto-asset exchange service providers if the sender’s name is different from the account name.”
Honduras Central Bank has not responded to a request for comment from Decrypt.
