The First Steps towards a Bitcoin-Based Economy
The city of Prospera in Honduras has recently taken a groundbreaking step by adopting bitcoin as a unit of account. This decision allows businesses to pay taxes and determine financial obligations using bitcoin. With bitcoin already being recognized as legal tender in the city since 2022, this move could potentially incentivize the development of a circular economy.
A New Era for Prospera
The announcement, made on January 5, revealed that Prospera has officially approved the use of bitcoin as a unit of account. This means that prices and taxes can now be denominated and paid using bitcoin. Jorge Colindres, the General Secretary of Prospera, expressed his support for this decision, emphasizing the importance of financial and monetary freedom:
"At Prospera, we believe in the right to financial freedom and monetary freedom. People should be free to carry out transactions, do their accounting, and report taxes in the currency of their free choice."
By adopting bitcoin as a unit of account, Prospera opens up possibilities for the establishment of a bitcoin circular economy within the city. This move is seen as an exciting opportunity for residents and businesses, as it paves the way for a modern and efficient economic ecosystem in this pioneering city.
Challenges and Limitations
While the adoption of bitcoin as a unit of account is a significant development, the payment of taxes with bitcoin is still pending due to external regulatory issues and technical limitations. The current electronic tax payment system adopted by Prospera faces challenges in handling bitcoin transactions. As a result, tax duties will be declared in bitcoin but will be reported to authorities in U.S. dollars or Honduran lempiras.
It is important to note that the adoption of bitcoin as legal tender in Honduras was a mere rumor in 2022. The country's central bank quickly dismissed these rumors, clarifying that bitcoin is not a regulated currency and does not hold the status of legal tender. The central bank also expressed concerns about the risks associated with cryptocurrencies due to their increasing popularity.
Prospera's Independent Decision
Despite the central bank's stance, Prospera possesses self-regulation faculties under the Development and Employment Zone (ZEDE) designation. This designation allows Prospera to make independent decisions regarding its economic policies. However, this autonomy has sparked criticism from some sectors of Honduran society who view the existence of these zones as a violation of the country's constitution and its sovereignty over the occupied territories.
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