The banking of Honduras, National Banking and Securities Commission, recently announced a ban on the country’s financial institutions, banning them from participating in the trading crypto and to hold digital assets.

This measure was adopted with the aim of preserving the integrity of the national financial system, through more rigorous control. Let’s see all the details below.

Honduras: The implications of the bank’s trading ban on the crypto market

As anticipated, the National Banking and Securities Commission (CNBS) of Honduras has issued a ban that prevents local financial institutions from participating in crypto trading or holding digital assets.

Currently, Honduran legislation does not include specific provisions for crypto assets, exposing users to risks such as fraud, operational issues and legal uncertainties.

There are also growing concerns about the use of such assets for illicit activities such as money laundering and terrorist financing.

CNBS highlighted the challenges related to decentralized nature of many cryptocurrency-related businesses operating in Honduras, often registered in external jurisdictions.

This decentralization makes it difficult regulatory oversightallowing potentially unmonitored activity.

The absence of specific regulations on cryptocurrencies in Honduran legislation exposes financial consumers to risks and fraud, as highlighted by the regulator.

Therefore, the CNBS issued a directive explicitly prohibiting Honduran financial entities from associating with cryptocurrencies, virtual currencies, tokens or digital assets not authorized by the Central Bank of Honduras.

This move aims to maintain a tight control over financial activities to preserve the integrity of the industry in the country.

Institutional interest in crypto, ban in Honduras and banking pressure in the USA

The ban on the use of cryptocurrencies in Honduras comes amid increasing institutional interest in the sector, with the launch of several Bitcoin exchange-traded funds (ETFs) in the United States.

US banking players are pushing the Securities and Exchange Commission (SEC) to review rules that make it expensive to provide custody services for these ETF.

The request has emerged from several banking institutions that wish to actively participate in the cryptocurrency sector, underlining the growing importance and demand for regulation in this space.

In the meantime, Matt Hougan, Chief Investment Officer of Bitwise highlighted that this request reflects the change in the “trend of cryptocurrency regulation in Washington” caused by Bitcoin ETFs.

According to data from ByteTreeinvestment vehicles holding Bitcoin now contain over 955,000 BTC, with an estimated value of nearly $50 billion.

In addition to the United States, other jurisdictions, including Hong Kong, are opening up their region to encourage the development of cryptocurrency trading activities.

Hong Kong and regulatory reform: the extension of regulations on OTC crypto trading

In contrast to Honduras, the regulatory authorities of Hong Kong are considering expanding cryptocurrency trading activities by introducing more stringent licensing requirements and rigorous testing procedures.

The proposed legislation aims to limit the range of assets available on over-the-counter (OTC) trading platforms, intensifying regulatory oversight in the cryptocurrency sector.

In the context of a recent public consultation conducted by Hong Kong Financial Services and the Treasury Office, the public was invited to give their views on the possible inclusion of the trading OTC of cryptocurrencies in current regulations.

The proposal stipulates that, if approved, OTC trading activities will be subject to the same regulatory requirements as traditional cryptocurrency exchanges. Therefore leading to a more limited selection of products available for sale to customers.

Under the proposal, anyone conducting spot trading activities of virtual securities in Hong Kong will need to obtain authorization from the Commissioner of Customs and Excise, subject to criteria of suitability, good repute and other factors considered relevant by the Commissioner.

The public debate was initiated primarily to address concerns related to anti-money laundering measures, as OTC trading currently escapes the stringent requirements imposed on traditional cryptocurrency exchanges.


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