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Cryptocurrencies and their treatment in Honduran legislation
[/vc_column_text][us_separator][vc_column_text]The Central Bank of Honduras (BCH), in response to inquiries about the use of cryptocurrency (bitcoin) as a means of payment in the national territory (Honduras), provides us with a definition of “cryptoassets” as follows: “…cryptoassets are financial instruments based on the use of encryption technologies (crypto) and through which, by mutual agreement between the parties, a right (asset) is transferred.” Unlike official currencies, cryptocurrencies offer the ease of transferring funds directly between two parties, without the need for third-party intermediation such as a bank or credit card company. These transfers are protected by the use of public and private keys and by different forms of incentive systems. The user generally has a “wallet” or account address, with a public key for identification, and a private key that only the owner knows and that they use to sign their transactions. Fund transfers are completed with minimal transaction fees, allowing users to avoid the high fees charged by banks and financial institutions. There is still no specific legislation or regulation regarding cryptocurrencies in Honduras. To date, Article 342 of the Constitution of the Republic establishes that, in our country, the Central Bank of Honduras (BCH) is the sole issuer of coins and banknotes that are legal tender in the national territory. In this sense, the BCH does not prohibit, supervise, or guarantee the use of cryptoassets as a means of payment within the national territory; nor is there protection for deposits made with cryptoasset resources. Therefore, any transaction carried out by individuals or legal entities with these virtual assets will be at the sole responsibility and risk of those conducting it. Everything seems to indicate that Honduras will be the next Central American country to regulate this activity. The Central American Bank for Economic Integration (CABEI), through its president, Dante Mossi, has expressed its willingness to provide technical assistance to the Central Bank of Honduras (BCH) in the use of cryptocurrencies. Honduras also has the so-called "Zones of Employment and Economic Development" (ZEDE) project, in which the Roatán Bay Islands ZEDE, for example, announced a few weeks ago the approval of cryptocurrencies for payments in that region. The Central Bank of Honduras later reported that it would conduct related tests and studies to confirm the viability of their use in the country. It remains to be seen whether their use will be formalized by the National Congress. Banks and financial institutions in the Honduran financial system can continue to play the same role they have thus far, treating cryptocurrencies exactly like any other form of payment. It is expected that, if the use of cryptocurrencies becomes widespread worldwide, a currency exchange agent will become necessary to carry out exchanges between "official" currencies and cryptocurrencies. It is undeniable that banks and financial institutions must adapt to manage these new exchange systems, as there is already a risk of being left behind, as is the case in our neighboring country of El Salvador. Like many central banks around the world, the Central Bank of Honduras (BCH) has adopted an open stance toward the innovations being developed through the use of new technologies to provide payment and financial services, both by training its technical staff and by studying the main trends and best practices worldwide. In this context, the BCH has begun the conceptual, legal, and technical study and analysis to determine the feasibility of conducting a pilot test by issuing its own digital money or Central Bank Digital Currency (CBDC), as the vast majority of central banks around the world are doing, including those that have already conducted pilot tests, such as Uruguay, Jamaica, China, and Singapore. In short, currently, if a transfer occurs between individuals, there is no regulation that can prevent it from taking place, as it bypasses all institutions supervised by the National Banking and Insurance Commission (CNBS), which are subject to scrutiny by the local government and international agreements. Obviously, if the transfer were to be carried out through a bank or financial institution, it would be subject to the same requirements and restrictions applicable to any other currency, as established in Honduras by the National Banking and Insurance Commission. Honduran authorities have made no further official statements on the matter, beyond the brief official announcements issued by the BCH (Bengal Central Bank). Despite the silence of the public administration on the matter, Honduras launched its first cryptocurrency ATM at the end of August of this year. Therefore, it is necessary to begin working on a bill and regulations that comprehensively regulate this issue, learning from the mistakes of El Salvador and other legislations where cryptocurrency is already officially in force. and then submit it to the National Congress for consideration and approval. Lexincorp Central American Law Firm is a full-service law firm, expert and leader in financial and banking matters, draft bill studies, and pioneers in investment matters. For comprehensive advice on the matter, please contact the following email address: dgranada@lexincorp.com.*Legal Notice: The general information contained in this document is provided for informational purposes only and should not be construed as legal advice on any of the topics discussed. You should not act or refrain from acting on the basis of any content contained herein without seeking legal or other professional advice. We disclaim any liability for any actions you take or refrain from taking based on any content in this communication.[/vc_column_text][us_separator][vc_column_text]
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[/vc_column_text][us_person image=”8932″ name=”Diego Granada” role=”Asociado” link=”url:http%3A%2F%2Flexincorp.com%2Fequipo_honduras%2Fdiego-granada%2F|title:Diego%20Granada||” layout=”cards” img_size=”full”][/us_person][/vc_column][/vc_row]
