Paying with BTC on Honduras’ island of Roatán.
Bitcoin is becoming a legal tender in the Honduras Próspera Autonomous Special Employment and Economic Development Zone (ZEDE). ZEDEs are a kind of independent, private model cities with their own government and fiscal and legal structure. The special economic zone is modelled on El Salvador and aims to attract crypto investors with the move. “BTC (Bitcoin) is considered legal tender in ZEDE Próspera,” the special zone explained via Twitter, assuring that cryptoasset companies could operate there “with the best regulatory environment in the world”. Following the example of other special zones of this kind, Próspera thus wants to attract investors and online companies by means of attractive tax regulations.
The special zone thus follows El Salvador, where Bitcoin already became legal tender in September last year. The move to BTC is not without controversy, and so – as in El Salvador – there were protests in Roatán. The central bank’s announcement that no guarantees could be given for transactions carried out using cryptocurrencies naturally did nothing to calm the protesters.
No tax on crypto trading
The prospect of investors and companies setting up here has made the Próspera administration forget the protests: In its announcement, it advertises that international companies will be allowed to issue bitcoin bonds and that all transactions and trading in cryptocurrencies will be tax-free. As a further step, Próspera also accepts that all taxes and fees otherwise due will be paid in Bitcoin. The US state of Colorado had already made such a move. Próspera’s administration assured that all international anti-money laundering measures would be taken into account when paying fees in BTC.
The International Monetary Fund (IMF), on the other hand, is not very happy about the flight from currencies like the dollar to Bitcoin, as it naturally takes a critical view of it – after all, it affects its business model of lending to countries. It sees the use of Bitcoin as posing major risks to financial stability and integrity, consumer protection and the associated contingent fiscal liabilities. President Nayib Bukele, however, continues to stick to his course and even announced a “Bitcoin City” in autumn, which is to be organised as a special zone like Próspera and is also to attract crypto investors as a tax haven. He also wants to promote mining in his country and relies on geothermal energy for energy production – one of the main problems in connection with Bitcoin: the Conchagua volcano is to be tapped to produce the necessary energy to operate the mining farms.
After Russia, which is backing Bitcoin for other reasons, there are also positive signals from Madeira and Mexico: Miguel Albuquerque, president of the autonomous region of Madeira, announced at the Bitcoin 2022 conference: “As the government of Madeira and as the president of the government, I believe in the future and I believe in Bitcoin.” Moreover, BTC transactions are to be completely tax-free. And Mexican Senator Indira Kempis is also considered a crypto fan since she returned from her trip to El Salvador at the end of February. She is also planning to introduce Bitcoin as a legal means of payment in Mexico.