What the Heck Honduras? Why Restrict BTC? And Why Now?
It's a line from the early World War II Hollywood classic Casablanca which lent a title to one of the best neo-noir crime thrillers of the 1990s, starring Kevin Spacey--who also starred in our personal favorite ensemble crime drama of the Nineties, LA Confidential.
When it comes to understanding why Honduras is taking a step backward on Bitcoin after chartering Próspera ZEDE on the island of Roatán and years of promoting a crypto-friendly new economy similar to its #BitcoinCountry neighbor El Salvador, it's best to watch out for the usual suspects, and not dig too deep into it.
TEGUCIGALPA, Feb 16 (Reuters) - 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."
For decades since the late Cold War-exacerbated conflicts of the 1980s, Honduras and the rest of Central America--with the exceptions of Panama and to some degree eco-tourist destination Costa Rica--have been earning a hard scrabble living primarily from banana/ag exports and remittances sent back home by compatriots working in the United States.
President Nayib Bukele--long may he reign--has taken giant steps to help his countrymen escape the Banana Republic under-development and debt trap, even as the Globalist American Empire's Metropole becomes more Third World-ish everyday. Legally adopting Bitcoin as legal tender and issuing BTC wallets to every Salvadoran adult who wanted one has been a game changer.
Following the charter of Próspera on Honduras' Caribbean Bay Islands, it seemed only a matter of time before Honduras followed a similar path to its belle of the Bitcoin ball neighbor, and created a circular BTC economy.
Not so fast, says the GAE, acting through its long Spectre octopus ring-like financial tentacles. Which as our Perpetual Playa friend Will Lehr mentioned in a recent interview, restrict to a great degree what the Salvadoran banks can do for their gringo clients as well.
First, the International Monetary Fund (IMF) has been busy in Honduras:
Aug 11 (Reuters) - The International Monetary Fund said on Friday it has reached a staff-level agreement with Honduras for a 36-month credit facility for about $830 million to support the country's economic reform policies.
In a statement, the IMF said the economic program focuses on helping address urgent social spending and investment needs, while anchoring macroeconomic stability. A credit facility is an agreement between a borrower and a lender that is more flexible than a traditional loan.
Nothing unusual for Latin America, even newly elected libertarian mad lad Javier Milei, as he takes a chainsaw to a massively bloated public sector at both the federal and state levels in Argentina, is having to negotiate with the IMFers. But then again, there's also been U.S. pressure on the Honduran ZEDE from the usual leftist Soros-aligned suspects, saying that the special economic zone does not uphold labor or environmental standards (which belching smokestacks or sweatshops one should see in Prospera, is not stated).
See Congressman Steven Horsford of Nevada's floor speech from the U.S. House of Representatives record from the 118th Congress of January 12, 2024 below, alleging that a leftist Castro government (there's a name in LatAm politics) is plotting to expropriate American investments in the Próspera ZEDE:
PROTECTING U.S. SECTOR INVESTMENTS IN HONDURAS
HON. STEVEN HORSFORD OF NEVADA IN THE HOUSE OF REPRESENTATIVES
Friday, January 12, 2024
Mr. HORSFORD.
Mr. Speaker, today, I rise in support of protections for U.S. private sector investments in Central America, which addresses the root causes of illegal immigration to the United States of America. In 2023, it was announced that the Government of Honduras would open six new consulates in the United States. They are intended to address the needs of Hondurans who made the dangerous journey to the United States and entered the country illegally. This after-the-fact approach is emblematic of a multilateral failure to deal with the root cause of illegal immigration—a fundamental lack of opportunity in Central America.
Once a local economy has failed to provide opportunity, job seekers are forced to look elsewhere to provide for their families. They often come to the U.S., but the battle is lost at this stage. Consulates in foreign land serving those who arrived here due to shortcomings of broken political systems are too little, too late. What do those who emigrate desire most? A secure, well-paying job in their own country. A thriving domestic private sector provides a job market that allows capable and ready-towork individuals to support their families. We know this can be done. In fact, in Honduras, it has been proven that U.S. private sector investment, spent wisely and properly deployed, is creating thousands of jobs in the local economy.
One prominent example is Honduras Prospera, a U.S.-led developer of special economic zones called ZEDEs. Prospera has invested over $100 million to bring new industries and new opportunities into Honduras. But now the underpinning Honduran constitutional ZEDE-law is under attack by President Xiomara Castro’s administration. They are threatening illegal retroactive repeal of the ZEDE law via an illegitimate reshuffling of the country’s Supreme Court. We cannot stand by and allow the expropriation of U.S. investment while denying thousands of Hondurans the right to a stable job. And this action violates a 50-year legal stability guarantee under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA–DR).
Undermining U.S. private sector investment will have significant and lasting negative effects for the Honduran people. Over the past few years, Honduras has confronted both the destruction wrought by Category 4 Hurricanes Eta and Iota, along with the impact of the COVID–19 pandemic. As Hondurans work to rebuild, ensuring stable U.S. investment will afford Hondurans a fair working environment that provides good economic, educational, health care, labor, and housing opportunities. Better domestic opportunities help to reduce the pressures that lead citizens to irregular migration.
Sustained U.S. investment in Honduras is strongly in our national security interest. After breaking Honduras’ alliance with Taiwan and establishing diplomatic ties with China, President Castro recently traveled to China to meet with President Xi Jinping ‘‘to jointly plan for the future development’’ and inaugurate Honduras’ embassy in Beijing. The promise of Chinese investment is both a powerful motivator for President Castro and a growing concern for global stability in the region. Preserving and furthering U.S. investment and engagement in Honduras is critical for our national security.
I encourage my fellow Members of Congress to ensure that all hard-working Hondurans who wish to live and work in their country can have the opportunity to do so. So, let’s request that U.S. agencies that control American visa access deny these benefits to any Honduran politician or policymaker advocating the expropriation of U.S. assets or investments. Strategic U.S. private sector investment is proving to make Honduras a land of opportunity for Hondurans while alleviating an ever-growing migration crisis here in the U.S.
Watch this space for more on Próspera soon, with replies to short Q&A written interview requests we've sent out pending.