TEGUCIGALPA - Honduras' CNBS regulator has banned the Central American country's financial system from trading in cryptocurrency and similar virtual assets, it said in a resolution, citing risks of fraud and money laundering.

The National Banking and Securities Commission said a resolution, dated from Monday but made public on Friday, had "immediate effect."

The resolution bans institutions under its supervision to "maintain, invest, intermediate or trade in cyptocurrencies, crypto-assets, virtual currencies, tokens, or any similar virtual assets not issued or authorized by the central bank."

Honduran law does not currently regulate crypto assets, though platforms trading in them do operate in the country.

The watchdog noted that as many of these platforms are domiciled in multiple jurisdictions, Honduran law cannot control them and they run the risk of "lending themselves to activities of fraud, money laundering and terrorist financing."

The Honduran central bank has warned that it is not responsible for and cannot guarantee any such transaction.

In March 2022, the central bank said it was studying the technical and legal viability of issuing its own digital currency, which would be regulated and recognized as legal tender. It has yet to announce a decision on this.

Honduras Prospera, a so-called model resort town on the Caribbean that operates as a zone of administrative, fiscal and budgetary autonomy (ZEDE), had in April 2022 announced its adoption of bitcoin as legal tender within its borders.

It was not immediately clear how it would be affected by the new policy.

  - Reuters