A special economic zone on a tourist-oriented island off the coast of Honduras has recognized bitcoin and other cryptocurrencies as legal tender, zone officials announced Friday.

While the country’s central bank recently denied reports that it was considering making bitcoin its de facto currency, a scenic jurisdiction called Próspera on the island of Roatán stated that it now recognizes cryptocurrencies as a legal tender in its jurisdiction.

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Pushing For Economic Development

The special economic zone, dubbed “Honduras Prospera,” was founded in 2020 to aid in the area’s economic development. It enjoys fiscal, administrative, and budgetary autonomy.

Prospera noted in a statement:

“Prospera’s dynamic regulatory structure fosters crypto innovation and the widespread use of Bitcoin by residents, businesses, and governments.”

The declaration comes as a surprise and will almost probably generate discussion in other countries, depending on how the move plays out.

According to the press release, there are other favorable developments. Local governments, municipalities, and foreign businesses will be able to issue Bitcoin bonds from the SEZ, another significant development for the asset.

The objective is that this will stimulate economic development by attracting foreign direct investment.

BTC total market cap at $835.55 billion on the daily chart | Source: TradingView.com

Joel Bomgar, the president of Honduras Próspera Inc., said Bitcoin within Próspera “functions as legal tender—that means no capital gains tax on Bitcoin, you can transact freely using Bitcoin, and you can pay taxes and fees with Bitcoin.”

El Salvador, a neighboring country, became the first government in the world to embrace bitcoin as legal currency in September, but with a rocky implementation and widespread public mistrust.

There have been numerous speculations recently claiming that Honduras’ 56th President, Xiomara Castro, may legalize bitcoin in the country.

Some sources have it that the Honduran government may even make a statement in the “coming days.”

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Central Bank: Not Legal Tender

On March 23, Honduras’ central bank put the rumors to rest, disclosing in a statement that crypto assets are not legal tender nor regulated in the country.

The bank clarified in a recent announcement:

“Any transaction involving this form of virtual asset is carried out at the risk and responsibility of the individual who executes it.”

While this decision is limited to the authority of the Próspera ZEDE economic zone, it is a significant one that may cause other governments to consider a similar course of action.

This is a demonstration of the numerous advantages of bitcoin and other cryptocurrencies. Bitcoin’s popularity has prompted the Honduran government to deploy ATMs around the country.

Featured image from CoinGeek, chart from TradingView.com