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  • J Markezic and M Bacina

Honduras Special Economic Zone makes Bitcoin Legal Tender

Próspera - a Special Economic Zone in Honduras - has recently announced that it will recognise cryptocurrency as legal tender. This announcement comes after Honduras' central bank dismissing claims that it would make Bitcoin legal tender just a few weeks ago.

Próspera follows Swiss city Lugano and El Salvador in declaring cryptocurrency legal tender. Whilst El Savador has placed the first issuance on the backburner due to international market conditions, Próspera's motives may be akin to Lugano's: specifically, to drive and attract investment to the city. Próspera believes the move will invite municipalities, governments and international firms to issue bitcoin bonds from within its jurisdiction.

An official press release by Próspera media has said:

[b]itcoin and other cryptocurrencies effectively operate as legal tender within its jurisdiction.

The President of Honduras Próspera Inc. - the entity responsible for promotion and organisation of the Próspera Special Economic Zone - Joel Bomgar has spoken on the move to recognise cryptocurrency as legal tender:

Bitcoin within Próspera operates as legal tender -- that means no capital gains tax on bitcoin, you can transact freely using bitcoin, and you can pay taxes and fees to the jurisdiction in bitcoin... [y]ou can also start a bitcoin business in the jurisdiction using the regulatory framework of your choice, and all done in an AML and KYC-compliant manner.

This is another instance of an emerging trend for crypto-friendly jurisdictions to embrace and adopt cryptocurrencies as legal tender. It will be interesting to see where in the world we see this happen next. It's also a timely reminder to keep Anti-Money Laundering and Know Your Customer obligations as a primary consideration.


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