Current Situation of Cryptocurrencies in Honduras
Digital Assets are defined by the Financial Action Task Force (FATF) as: “a digital representation of value that can be traded or transferred digitally and can be used for payments or investments.” (Financial Action Task Force, 2023). This definition includes one of the most well-known and widely used digital assets worldwide—cryptocurrencies—such as Bitcoin, Ethereum, Tether, Binance Coin, among others.
The digital asset sector is experiencing significant global growth. According to the Triple-A platform, approximately 562 million people worldwide own cryptocurrencies, reflecting a 33% increase in global cryptocurrency usage in 2024 compared to 2023. According to this platform, over 240,000 people in Honduras own some form of cryptocurrency, representing 2.8% of the total population. Honduras ranks as the third country in Central America with the highest number of cryptocurrency owners, following El Salvador (636,494 people) and Guatemala (263,422). Other Central American countries (Nicaragua, Costa Rica, and Panama) each have fewer than 100,000 cryptocurrency holders.
Cryptocurrencies serve as investment instruments, generating returns for their holders like any other asset. However, they also come with associated risks that must be identified and mitigated.
Benefits of Digital Assets
- Easy accessibility: Transactions can be made with just an internet connection.
- Decentralization: Cryptocurrencies are not controlled by any centralized authority.
- Blockchain technology: Ensures traceability and transparency in transactions.
Risks Associated with Digital Assets
- High volatility: Cryptocurrency values can fluctuate significantly in short periods due to news, political decisions, and other factors.
- Potential misuse: Cryptocurrencies could be used in illicit activities such as money laundering and terrorism financing (although no evidence suggests that digital assets are more commonly used for such activities than traditional fiat currencies).
- Regulatory uncertainty: Many countries lack clear regulations on digital assets, creating risks for users and leading to misconceptions about their legality.
FATF’s Regulatory Recommendations
Due to the growing use of digital assets, the FATF updated Recommendation No. 15 in 2018 to include Digital Assets (DA) and Digital Asset Service Providers (DASP). The recommendation urges countries to:
- Identify and assess the risks associated with digital assets and their service providers, following a risk-based approach.
- Require DASP to obtain licenses in the countries where they operate.
- Implement regulations ensuring compliance measures such as due diligence, transaction monitoring, and compliance programs.
- Establish deterrent sanctions for non-compliance.
Additionally, in 2023, the Financial Action Task Force of Latin America (GAFILAT) published a report identifying typologies of money laundering and terrorism financing through digital assets. The fourth update of its report on regional threats recognized digital assets as an emerging risk.
Regulatory Situation in Honduras
Honduras has no specific regulation covering digital assets broadly or cryptocurrencies in particular.
Despite this, cryptocurrency usage in the country is acknowledged. The Central Bank of Honduras (BCH) and the National Banking and Securities Commission (CNBS) have issued public statements on the matter. In 2018, 2020, and 2022, the BCH released warnings advising economic and financial agents that cryptocurrencies are not regulated in the national payment system, are not guaranteed by the government, and therefore, do not have legal protection. Anyone using cryptocurrencies does so at their own risk.
Additionally, the CNBS issued Circular No. 003/2024, acknowledging the circulation of cryptocurrencies in Honduras and reaffirming their lack of regulation and legal protection. It also warned users of potential fraud, operational risks, and legal issues. The CNBS prohibits supervised financial institutions from transacting with cryptocurrencies or allowing users to conduct crypto transactions via their platforms. However, a clarification was later issued, stating that the prohibition applies specifically to financial institutions to protect depositors’ funds. Individual users remain free to trade cryptocurrencies at their own risk.
Conclusion
Cryptocurrencies are investment instruments that, like any investment, involve risks but also offer significant profit potential. In finance, the principle holds: “higher risk, higher return.” In Honduras, financial institutions are prohibited from engaging in cryptocurrency transactions to safeguard depositors’ funds. However, there are no legal restrictions preventing the general public from conducting cryptocurrency transactions.
If you would like more information on this topic or need legal assistance, feel free to contact us at: cpecorelli@lexincorp.com / infohn@lexincorp.com
Written by: Attorney Carlos Pecorelli
