Is Crypto Legal in Honduras?

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

This law establishes the framework for preventing, detecting, and punishing money laundering and financing of terrorism in Honduras.

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.

While VASPs are not explicitly named, if a VASP engages in activities that fall under the general definition of financial services or involves fiat currency conversions through regulated entities, those regulated entities (banks, etc.) will apply the requirements of this law.

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.

Purpose and Nature of Relationship: Understanding the purpose and intended nature of the business relationship or occasional transaction.

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.

Role: This is the primary financial regulatory body in Honduras. While it doesn't specifically regulate VASPs, it oversees regulated financial institutions that might interact with virtual assets. It has issued warnings regarding the risks of cryptocurrencies.

The UIF operates under the CNBS (or closely associated with it) and is the body responsible for receiving, analyzing, and disseminating STRs. Any reports concerning virtual asset activities would likely go here.

Role: The Central Bank is responsible for monetary policy and financial stability. It has repeatedly stated that cryptocurrencies are not legal tender in Honduras and has warned against their use due to volatility, lack of regulation, and potential for illicit activities.

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

De-risking by Banks: Honduran banks, being regulated entities, are often cautious about dealing with crypto businesses due to the lack of clear VASP regulation and perceived AML/CFT risks. This can make it challenging for VASPs to access traditional banking services.

Future Legislation: Honduras is under pressure from international bodies like FATF-LAC to implement VASP-specific regulations. Discussions are ongoing, and future legislation is highly anticipated, which would specifically designate VASPs as "reporting entities" and detail their obligations.

FATF Standards: Even without local VASP laws, responsible VASPs should proactively align themselves with the FATF's Recommendations, particularly Recommendation 15 on virtual assets and VASPs, and the guidance documents published by FATF.

Honduras does not have a comprehensive, dedicated legal framework specifically addressing cryptocurrency or digital asset AML regulation as of 2025–2026; the existing AML/CFT regime was designed for traditional financial institutions and has not been substantively updated to address virtual assets. Honduras - State.gov

The National Banking and Insurance Commission (CNBS) serves as the primary regulator for AML/CFT compliance, and the Financial Investigation Unit (FIU) is housed within the CNBS but lacks operational and budgetary independence. Honduras - State.gov

No licensing or registration framework exists specifically for cryptocurrency exchanges, digital asset service providers, or virtual asset businesses in Honduras. Honduras - State.gov

No entities have been licensed or registered as cryptocurrency businesses or virtual asset service providers under any Honduran regulatory regime. Honduras - State.gov

The practical reality is that cryptocurrency businesses operate in a legal gray area: they are neither explicitly prohibited nor authorized, and they face uncertainty regarding AML obligations, tax treatment, and regulatory oversight. Honduras - State.gov

Honduras is a member of the Financial Action Task Force of Latin America (GAFILAT), a FATF-style regional body, and a GAFILAT mutual evaluation of Honduras was completed in 2016. Honduras - State.gov

The National Banking and Insurance Commission (CNBS) is the primary regulator for AML/CFT compliance in Honduras. Honduras - State.gov

The Financial Investigation Unit (FIU), Honduras' financial intelligence unit, is housed within the CNBS and is fully operational but inadequately staffed. Honduras - State.gov

The Interagency Commission for the Prevention of Money Laundering and Financing of Terrorism (CIPLAFT) was created in 2004 to coordinate public offices implementing the Asset Forfeiture Law and money laundering controls. Honduras - State.gov

Honduras criminalizes money laundering under an "all serious crimes" approach to predicate offenses, and legal persons can be held criminally and civilly liable. Honduras - State.gov

The Honduran government should develop an integrated national strategy against criminality and impunity to support the AML/CFT regime improvements. Honduras - State.gov

The legality of bearer shares presents a significant money laundering vulnerability in Honduras. Honduras - State.gov

The government should fully implement laws requiring the establishment of a supervisory entity for designated non-financial businesses and professions and adopt implementing regulations to bring those entities under the AML/CFT regime. Honduras - State.gov

While mechanisms are in place to freeze terrorist assets, systematic inefficiencies and lack of capacity hinder timely action. Honduras - State.gov

No licensing or registration framework exists specifically for cryptocurrency exchanges, digital asset service providers, or virtual asset businesses in Honduras. Honduras - State.gov

The CNBS regulates traditional financial institutions but has not established a licensing regime applicable to virtual asset businesses. Honduras - State.gov

KYC covered entities include banks, lending companies, financial service companies, check cashers, issuers or processors of financial instruments, traveler's checks, or money orders, money transfer businesses, stock exchange, exchange houses, exchange posts, general deposit warehouses, public and private pension managers, insurance companies, casinos and gaming establishments. Honduras - State.gov

ZERO entities have been licensed as cryptocurrency businesses or virtual asset service providers in Honduras, as no licensing mechanism exists for such activities. Honduras - State.gov

No capital requirements have been established for virtual asset businesses because no licensing regime exists for them. Honduras - State.gov

The application process and timeline for cryptocurrency licensing cannot be defined because no such licensing framework has been created. Honduras - State.gov

Know-your-customer (KYC) rules apply to banks, lending companies, financial service companies, check cashers, issuers or processors of financial instruments, traveler's checks, or money orders, money transfer businesses, stock exchange, exchange houses, exchange posts, general deposit warehouses, public and private pension managers, insurance companies, casinos and gaming establishments. Honduras - State.gov

Enhanced due diligence procedures for politically exposed persons (PEPs) are required for both foreign and domestic PEPs. Honduras - State.gov

Suspicious transaction report (STR) covered entities include banks, insurance companies, money exchange or remittance services, cooperative institutions and financial societies, credit card issuers, securities firms, private or public pension funds, notaries, real estate intermediaries, car dealers, dealers in precious metals, jewels, art, and antiquities, and lotteries and casinos. Honduras - State.gov

Insurance brokers, lawyers, and accountants are obligated to report suspicious transactions, but in practice no reports are filed. Honduras - State.gov

Honduras revised its STR form to capture as much information as possible from individuals conducting suspicious cash transactions, following complaints that financial institutions were not properly identifying customers. Honduras - State.gov

The revised STR was presented to the Honduran Banking Association for review and was awaiting approval of the President of the CNBS. Honduras - State.gov

Between January 1, 2014 and October 31, 2014, 741 STRs were received, and 96,084 currency transaction reports (CTRs) were received. Honduras - State.gov

The FIU referred 162 STRs to the Public Ministry between January 1, 2014 and October 31, 2014. Honduras - State.gov

The government should fully implement laws requiring the establishment of a supervisory entity for designated non-financial businesses and professions and adopt implementing regulations to bring those entities under the AML/CFT regime. Honduras - State.gov

Beneficial ownership requirements are not explicitly detailed in the available information, though bearer shares present a significant money laundering vulnerability. Honduras - State.gov

An operation against the Valle Family in the Department of Copan resulted in the arrest of 10 individuals associated with the Valles, three of whom were awaiting extradition to the United States on charges of trafficking narcotics. Honduras - State.gov

Honduras seized approximately $50 million in bank accounts and other assets, including a cattle ranch, a hotel, and luxury real estate in connection with the Valle Family operation. Honduras - State.gov

Between January 1, 2014 and October 31, 2014, there were 11 money laundering prosecutions and 6 convictions in Honduras. Honduras - State.gov

No enforcement actions have been taken against cryptocurrency businesses or virtual asset service providers because no entities are licensed or registered and no specific regulatory framework exists for them. Honduras - State.gov

No tax guidance has been issued for virtual assets in Honduras. Honduras - State.gov

The available regulatory framework does not address income tax, capital gains tax, or VAT treatment for cryptocurrency transactions. Honduras - State.gov

Honduras has not issued any official guidance on how crypto gains would be classified or taxed under its existing tax laws. Honduras - State.gov

Honduras lacks a comprehensive legal framework for cryptocurrency and digital assets, leaving virtual asset businesses in a regulatory vacuum. Honduras - State.gov

The FIU does not have operational and budgetary independence, which limits its effectiveness in combating money laundering. Honduras - State.gov

The CNBS's capacity to conduct compliance investigations is limited due to insufficient staff, and low staffing levels combined with increased responsibility delay response times for prosecutors' information requests. Honduras - State.gov

Lack of data and systematic analysis makes it difficult for the Honduran government to identify trends in money laundering. Honduras - State.gov

Lack of cooperation, communication, and coordination at all levels within the Government of Honduras has obstructed a higher success rate in investigations and prosecutions. Honduras - State.gov

Honduran law enforcement practices rely on unsophisticated techniques such as paper files and unsecured emails and evidentiary documents, which allows information to leak and ultimately affects the integrity of investigations. Honduras - State.gov

Insurance brokers, lawyers, and accountants are obligated to report suspicious transactions, but in practice no reports are filed, indicating a significant implementation gap. Honduras - State.gov

The legality of bearer shares presents a significant money laundering vulnerability. Honduras - State.gov

There is no supervisory entity for designated non-financial businesses and professions, and implementing regulations have not been adopted to bring those entities under the AML/CFT regime. Honduras - State.gov

Mechanisms to freeze terrorist assets face systematic inefficiencies and lack of capacity, hindering timely action. Honduras - State.gov

For cryptocurrency businesses, the absence of a clear regulatory framework means they cannot obtain a license, cannot access the formal banking system with confidence, and face uncertainty regarding their AML obligations. Honduras - State.gov

Honduras' geographic location makes it an ideal haven for transnational organized crime groups, and the Central America Four Agreement represents a vulnerability for cross-border movement of contraband and proceeds of crime. Honduras - State.gov

Corruption within the law enforcement and judicial sectors contributes to a favorable climate for significant money laundering. Honduras - State.gov

Honduras' measures to combat money laundering and terrorist financing

Honduras' progress in strengthening measures to tackle money laundering and terrorist financing

IMF Staff Concludes Visit to Honduras

OCTOBER 2016 Mutual Evaluation Report of the Republic of Honduras

Banco Central de Honduras - Comunicados de Prensa

Comisión Nacional de Bancos y Seguros (CNBS): As the primary regulator for banks and insurance companies, the CNBS generally aligns with the BCH's stance, focusing on consumer protection and financial stability. No specific custody regulations for digital assets have been issued by the CNBS.

Comisión Nacional de Bancos y Seguros (CNBS) - Official Website

No specific custodial license requirements exist for digital asset custodians in Honduras. Since cryptocurrencies are not recognized or regulated, there is no legal framework or licensing regime for entities providing crypto custody services. Any entity attempting to operate a dedicated crypto custody business would be doing so outside of formal regulatory oversight.

It is highly probable that traditional financial institutions (banks, fiduciaries) licensed by the CNBS are prohibited from offering direct crypto custody services due to the BCH's warnings and the lack of a legal framework.

Segregation of Client Assets Rules:

No specific rules or mandates exist for the segregation of client digital assets. In a regulated environment, segregation is crucial to protect client funds in case of custodian insolvency. However, without a regulatory framework, such requirements are non-existent.

No specific insurance or bonding requirements are mandated for digital asset custodians. This means that if a crypto custody service were to fail or suffer a hack, clients would likely have no recourse through mandated insurance.

No specific cold storage mandates exist. Technical security requirements like the use of cold storage (offline storage of private keys) are typically part of detailed regulatory frameworks for digital asset custodians. Given the absence of such a framework, no such mandates are in place.

No legal definition for a "qualified custodian" in the context of digital assets exists in Honduran law or regulation. The concept of a qualified custodian is generally introduced in jurisdictions where digital assets are recognized and integrated into a regulatory framework, often requiring specific capital, operational, and security standards.

As of late 2023/early 2024, there is no publicly announced or formally proposed specific legislation in Honduras that would establish a regulatory framework for digital asset custody.

While Honduras, like many countries, is under pressure from international bodies such as the Financial Action Task Force (FATF) to implement Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) regulations for Virtual Asset Service Providers (VASPs), this typically focuses on identity verification and transaction reporting rather than specific custody rules. Any future VASP regulation would likely start with AML/CFT compliance before delving into detailed custody requirements.

The current official stance remains highly cautious, with the BCH warning against crypto use rather than moving towards regulation.

Legal Basis: UN Security Council Resolutions, issued under Chapter VII of the UN Charter, are legally binding on all UN member states. Honduras is obligated to implement these resolutions into its national law and practice.

Asset Freezing: Immediately freeze funds and other assets of individuals and entities designated by the UN Security Council (e.g., on the ISIL (Da'esh) & Al-Qaida Sanctions List, Taliban Sanctions List, various country-specific sanctions lists).

Prohibition of Services: Prohibit making funds or financial services available to sanctioned individuals/entities.

Reporting: Report frozen assets and attempted transactions to the relevant authorities (e.g., Financial Intelligence Unit of Honduras - UIF-HN).

Relevance to Crypto: If a Honduran entity (even an individual engaging in international crypto transactions) were to interact with a UN-sanctioned individual or entity using crypto, they would be in violation of these obligations.

United Nations Security Council Sanctions Committees: https://www.un.org/securitycouncil/sanctions/information

Financial Action Task Force (FATF) Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers: FATF recommends that VASPs implement controls to detect and prevent proliferation financing and targeted financial sanctions evasion.

Extra-territorial Reach: OFAC (Office of Foreign Assets Control) sanctions are U.S. law, but they have significant extra-territorial reach. They apply to:

U.S. persons (including U.S. citizens, permanent residents, entities incorporated in the U.S., and their foreign branches).

Transactions that touch the U.S. financial system or involve U.S.-origin goods/services.

In certain cases, non-U.S. persons who cause a violation by a U.S. person, or who engage in activities subject to "secondary sanctions."

Prohibited Transactions: U.S. persons (and others subject to OFAC jurisdiction) are generally prohibited from engaging in transactions with individuals and entities on the Specially Designated Nationals and Blocked Persons (SDN) List and other OFAC sanctions lists.

Asset Blocking: Assets of sanctioned parties that come within U.S. jurisdiction must be blocked.

Sanctioned Geographies: Restrictions apply to transactions involving comprehensively sanctioned jurisdictions (e.g., Cuba, Iran, North Korea, Syria, and certain regions of Ukraine/Russia).

Relevance to Crypto: OFAC has explicitly targeted cryptocurrency addresses and entities involved in sanctions evasion. Any Honduran entity or individual conducting crypto transactions that involve U.S. persons, U.S.-based crypto exchanges, or touch the U.S. financial system (e.g., stablecoins issued by U.S. entities) must comply.

OFAC Sanctions Programs and Country Information: https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-country-information

OFAC Guidance for the Virtual Currency Industry (2020): https://home.treasury.gov/system/files/126/ofac_guidance_virtual_currency.pdf

All nationals of EU Member States.

Entities incorporated or constituted under the law of an EU Member State.

Any person or entity in respect of business done in whole or in part within the EU.

Asset Freezing: Freeze funds and economic resources of listed individuals and entities.

Sectoral Sanctions: Apply to certain sectors (e.g., finance, technology) concerning specific countries.

Relevance to Crypto: Similar to OFAC, if a Honduran entity or individual conducts crypto transactions involving EU persons, EU-based exchanges, or entities within the EU, they must comply with EU sanctions.

EU Sanctions Map (Consolidated List): https://sanctionsmap.eu/#/main

Council Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA): While MiCA primarily regulates crypto-assets, it also reinforces AML/CFT and sanctions compliance obligations for VASPs operating within the EU.

Regulator Name: Banco Central de Honduras (BCH)

Honduras' financial regulator (CNBS) issued a mandatory prohibition on financial institutions trading crypto assets, which is a binding regulatory restriction rather than a non-punitive clarification. The action targets financial system institutions, not the general public, and no monetary penalty was imposed, but the prohibition itself constitutes active enforcement.

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.

News coverage confirming the stance: https://www.reuters.com/markets/currencies/honduras-central-bank-says-bitcoin-not-legal-tender-warns-risks-2024-03-27/

Criminal Cases: While there might be instances of fraud or money laundering investigations by the Public Ministry (Ministerio Público) or police involving cryptocurrencies, these fall under general criminal law, not specific cryptocurrency enforcement by a financial regulator against a crypto entity. These are typically cases against individuals involved in scams rather than regulatory actions against established crypto businesses. Information on such criminal cases is often less detailed publicly regarding "penalty amounts" and "entity targeted" in the context of financial regulation.

Honduras' regulatory focus on digital assets is still early-stage, but it has moved beyond simple risk warnings to concrete prohibitions. The National Banking and Insurance Commission (CNBS) has explicitly prohibited financial institutions from handling cryptocurrencies, reflecting a protective stance aimed at financial stability. While there is no crypto licensing regime, Honduras has issued 2022 regulations for fiat-backed electronic money services, which do not cover crypto assets.

Legal Basis: UN Security Council Resolutions, issued under Chapter VII of the UN Charter, are legally binding on all UN member states. Honduras is obligated to implement these resolutions into its national law and practice.