Crypto-funded debit card in Honduras

Ley Contra el Lavado de Activos (Law Against Money Laundering) – Decreto No. 144-2014.

It defines "reporting entities" (sujetos obligados) which primarily include banks, financial institutions, insurance companies, and other specified entities, and obliges them to implement AML/CFT measures.

Identification and Verification:

For Individuals: Obtaining and verifying full legal name, date of birth, residential address, nationality, and a unique identification number (e.g., national ID card, passport). Verification should involve reliable, independent source documents, data, or information.

For Legal Entities: Obtaining and verifying legal name, legal form, address, proof of incorporation/existence, names of directors and beneficial owners (UBOs), and the legal representative's identification.

Ongoing Monitoring: Continuously monitoring transactions and activities throughout the business relationship to ensure consistency with the customer's profile and source of funds.

Risk Assessment: Implementing a risk-based approach to CDD, applying enhanced due diligence (EDD) for higher-risk customers (e.g., Politically Exposed Persons - PEPs, customers from high-risk jurisdictions, complex structures) and simplified due diligence (SDD) for lower-risk ones.

Beneficial Ownership: Identifying and verifying the beneficial owners of legal persons and arrangements.

Sanctions Screening: Screening customers against national and international sanctions lists.

Reporting Obligation: Report any transaction or attempted transaction, regardless of amount, where there are reasonable grounds to suspect money laundering or terrorism financing.

No Tipping-Off: Prohibits disclosing to the customer or third parties that an STR has been or will be filed.

CDD Records: Copies of identification documents, verification data, and any other information obtained during the CDD process.

Transaction Records: Details of all transactions, including amounts, types of assets, dates, and parties involved (including originating and beneficiary information, as per FATF Travel Rule principles, even if not explicitly legislated for VASPs in Honduras).

STRs: Copies of all suspicious transaction reports filed.

Retention Period: Typically, records must be kept for a minimum of five (5) years after the business relationship has ended or after an occasional transaction has taken place.

Comisión Nacional de Bancos y Seguros (CNBS) – National Commission of Banks and Insurance:

Unidad de Inteligencia Financiera (UIF) – Financial Intelligence Unit:

Banco Central de Honduras (BCH) – Central Bank of Honduras:

Lack of Specific Licensing: VASPs are not currently licensed or specifically regulated as such in Honduras. This creates legal uncertainty and potential operational risks.

Comunicado del Banco Central de Honduras (BCH) - 12 de enero de 2022:

The BCH's communiqué explicitly states that cryptocurrencies (which include stablecoins by definition) are not legal tender in Honduras and are not backed by the BCH.

The communiqué emphasizes that financial operations with these assets are carried out "at the risk of those who perform them."

None. Since stablecoins are not regulated or recognized within the formal financial system, there are no prescribed reserve requirements for issuers by the Honduran authorities. Any reserves held by a stablecoin issuer operating in or serving Honduran users would be entirely at the issuer's discretion and subject to their own internal policies, not Honduran law.

No guaranteed redemption rights under Honduran law. As stablecoins are not regulated, there are no legal guarantees or frameworks in place to enforce redemption rights for holders against issuers within Honduras. Redemption would depend solely on the terms and conditions set by the stablecoin issuer and their ability to honor those terms.

Regulator Name: Banco Central de Honduras (BCH)

Date: March 25, 2024 (Communiqué 001/2024) - Although this specific communiqué is from 2024, it reiterates and strengthens previous warnings, making it the most current and definitive statement within the timeframe. Previous, less formal warnings have been issued in prior years.

Outcome: The BCH officially stated that cryptocurrencies are not legal tender in Honduras and are not backed or regulated by the Central Bank. It also warned the public about the inherent risks associated with using and investing in cryptocurrencies, emphasizing that they are not recognized as currency or assets by the Honduran financial system. This effectively prohibits financial institutions under BCH supervision from operating with cryptocurrencies as recognized assets and strongly advises the public against their use.

Absence of Specific Crypto Laws: Honduras does not have specific laws regulating cryptocurrency exchanges or service providers. Therefore, there are no "crypto-specific" regulatory violations for which an entity could be fined or sanctioned by a financial regulator in the way you might see in the US or Europe.

Regulatory Focus: Honduras, like many smaller nations, is still in the early stages of addressing digital assets. Its focus has been on protecting the financial system's stability and informing the public about risks, rather than establishing a licensing regime or proactive enforcement against crypto companies.

No Specific Crypto Capital Gains Tax: Honduras does not have a distinct capital gains tax regime specifically for cryptocurrencies.

Potential Interpretation: If the tax authority (Servicio de Administración de Rentas - SAR) were to consider cryptocurrency a form of "property" or "asset," any gains realized from its sale or exchange could potentially be subject to the general income tax framework. This would mean:

General Income Reporting: If, under existing tax laws, cryptocurrency activities are deemed to generate taxable income or gains, individuals and businesses would be expected to report these on their standard annual income tax declarations (Declaración Anual del Impuesto Sobre la Renta).