A release was recently published by the Central Bank of Honduras that is aimed at clarifying the institution’s stance regarding the use of crypto in the country.
According to the organization, even though these instruments have garnered a lot of popularity in other nations, cryptocurrencies do not come with backing and are also highly volatile in nature.
Therefore, it added that anyone conducting transactions involving cryptocurrencies would be responsible for the risks associated with them.
Gray area
There are some countries that are moving towards regulating and integrating crypto in their economic system, while others are outright opposed to such a move.
A statement was recently issued by the Central Bank of Honduras to shed some light on the institution’s stance about the use of crypto on Honduran soil.
The organization clarified that the national law dictates that only the Central Bank of Honduras has the authority of issuing money and for ensuring an efficient payment system.
This indirectly implies that it is not in favor of cryptocurrencies, which are still in a gray area in the country because Honduras has not introduced any bill for their regulation as yet.
Therefore, the bank issued a warning to customers and said that crypto lacks support and regulation. It said their use did not come with a guarantee, so national laws will not be able to offer any protection.
Volatility risks
The volatile nature of crypto assets is another issue that the Central Bank of Honduras has raised. It pointed out that cryptocurrencies can lose their value abruptly.
This is currently evident in the crypto market right now, which has suffered extensive losses since last year, as its total market capitalization has fallen from an all-time high of $3 trillion to $1 trillion.
Likewise, the bank also criticized the use of crypto as a means of payment. It said that people will be responsible for any risk incurred in a crypto transaction.
Crypto popularity
The Honduran bank’s reaction is likely because of the increasing popularity of cryptocurrencies in the country.
A crypto-economic zone in the nation called Prospera has gone as far as adopting Bitcoin as legal tender, similar to what El Salvador had done last year.
It is now allowing citizens to make their tax payments in BTC and there is no capital gains tax applicable on the use of Bitcoin.
However, it should be noted that Bitcoin has not been declared legal tender for the whole of Honduras. But, there had been rumors about it back in March.
According to some media outlets, Honduran president Xiomara Castro could declare bitcoin as legal tender.
But, the central bank disregarded these reports and said that they were not based on fact. It is not the only central bank to have expressed its concerns about crypto.
There are a number of other banking institutions that have shared the same doubts, such as the Reserve Bank of India (RBI) and the Central Bank of Russia (CBR).
