Honduras’ National Banking and Securities Commission (CNBS) has issued a resolution banning the country’s financial institutions from handling crypto. The Honduran central bank is unable to guarantee crypto transactions because they are not regulated, it said.

The resolution stated that users of cryptocurrencies and financial services based on blockchain technology may be exposed to fraud and operational and legal risks, “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.”

Due to its unregulated nature, crypto assets are also liable to be used for fraud, money laundering and financing terrorism, the resolution continued. Therefore, the CNBS resolved to:

“Prohibit institutions supervised by the National Banking and Securities Commission from maintaining, investing, intermediating or operating with cryptocurrencies, crypto assets, virtual currencies, tokens or any other similar virtual asset.”

Supervised institutions are also prohibited from holding derivative instruments based on crypto assets. The resolution required that the dangers posed by crypto assets be included in financial education programs as well. Crypto exchanges operate freely in Honduras.

The CNBS is part of the Honduran presidential administration. The resolution, dated Feb. 12, was released on Feb. 15. It said it was approved unanimously and takes effect immediately.

The Honduran central bank issued a warning about the use of crypto in March 2022, after press reports that the country may follow El Salvador’s lead in making Bitcoin (BTC) legal tender. It stated at the same time that it was studying the issuance of a central bank digital currency.

I have now been in Honduras for about one month.

I am here attending the two months long popup city #Vitalia, an event at the frontier of technology and policy, where 200+ attendees with backgrounds in biotech, crypto, AI and charter cities live, work, and learn together.

Some… pic.twitter.com/aYNfjB5lME

— Petar Čekerevac (@pcekerevac) February 10, 2024

Nonetheless, Bitcoin has made some inroads into Honduras. The country is home to Bitcoin Valley, which opened in the summer of 2022 with hopes of attracting tourists who could pay in Bitcoin, USD or the Honduran lempira.

Honduras is also home to Próspera, a city in the special economic zone on the island of Roatan, where Bitcoin was made legal tender in 2022 and designated as a unit of accounting in January. It is unclear how the CNBS resolution will affect those areas.