Honduras special economic zone recognizes Bitcoin as legal tender

TL;DR Breakdown

  • The Próspera ZEDE economic zone in Honduras to make Bitcoin a de facto currency.
  • The Central Bank of Honduras expresses apprehension about adopting cryptocurrencies.

In a press release, the Próspera ZEDE economic zone in Honduras announced that Bitcoin would become a de facto currency. This big move comes second to El Salvador’s decision to legalize Bitcoin as legal money throughout its economic zone.

Honduras SEZ adds Bitcoin as a payment method

BTC and other cryptocurrencies will function as legal money in the Próspera ZEDE zone, a special economic zone (SEZ) on Roatán in the Western Caribbean. The Northern Corridor of Honduras plays host to the SEZ. The news comes as a surprise, and it is sure to start a debate in other countries. It’s all up to how this policy plays out, of course.

The Honduran government created a special economic zone in 2020 called “Honduras Prospera” to promote investment. The SEZ has administrative, financial, and budgetary autonomy as well. Honduras Prospera helps the financial situation of the people living on the beautiful Roatan Island and in the city of La Ceiba on Honduras’ Atlantic Coast.

“Prospera’s flexible regulatory framework enables crypto-innovation and the use of Bitcoin by residents, businesses, and governments,” Honduras Prospera said in a statement.

There have been several more good news reports in the press release. The SEZ will allow local governments, international businesses, and municipalities to issue Bitcoin bonds, which is another critical step forward for the asset. The goal is for this initiative to entice overseas direct investment and stimulate economic progress.

Thanks to the new regulation, individuals and companies can now use Bitcoin as payment. Furthermore, capital gains tax will not apply to Bitcoin and other cryptocurrency transactions. Additionally, Honduran citizens can pay taxes and fees in BTC.

According to the reports, the Bitcoin Bond will let local communities access the global crypto market directly. As a result, they think it has the potential to help transform disadvantaged regions into flourishing centers of innovation and prosperity.

Despite the country’s economic development, the Honduran Central Bank has stated that it cannot vouch for cryptocurrency transactions. In  March, the bank stated, “Any transaction carried out with this type of virtual asset falls under the person’s responsibility and risk.” 

Bitcoin adoption plans as a legal tender spikes

This is an exciting development for Bitcoin, the blockchain, and other cryptocurrencies. While it only applies to the Próspera ZEDE economic zone, it is still a significant step that could inspire other nations to consider doing the same. It is an experiment that may demonstrate how profitable Bitcoin and other cryptocurrency technologies are. The country has also made use of crypto ATMs.

Some lawmakers and officials may be hesitant to support its usage due to the lack of control and shady connections. Still, many have proposed anti-money laundering/counter financing terrorism restrictions in an effort to minimize its use for these purposes.

In September, neighboring nation El Salvador became the first in the world to accept Bitcoin as legal currency, although the rollout was rocky and met with public doubt.

While the adoption of Bitcoin by a small Central American nation isn’t enough to establish it as a real-world currency, it may be the first domino to fall. Other nations are already looking to El Salvador’s historic decision, and if they determine it is viable, Bitcoin could become widely accepted.

The day after El Salvador legalized bitcoin, Panama introduced legislation to make it a legal currency. Despite the fact that no legislation exists, Panama is well to become the second country to legalize Bitcoin.

According to reports, a member of Paraguay’s Chamber of Deputies has proposed a bill to legalize and regulate Bitcoin in the South American country. That same politician, Carlitos Rejala, plans to run for president in 2023 on a platform that includes making Bitcoin the country’s official currency.

Finally, although Cuba has not wholly adopted cryptocurrency as legal currency, it has made efforts in that direction. The country officially recognizes and regulates cryptocurrencies, which means its citizens can use them.

The cryptocurrency market is ever-changing, and regulation is one of the reasons why. The crypto community remains confident that Bitcoin will achieve worldwide acceptance in the future.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.