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A representations of cryptocurrency Bitcoin is seen in front of a stock graph and U.S. dollar in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/File Photo

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TEGUCIGALPA, April 7 (Reuters) - A special economic zone on a tourist-centric island on Honduras' Caribbean coast has adopted bitcoin and other cryptocurrencies as legal tender, officials of the zone said on Thursday.

Called "Honduras Prospera," the special zone was established in 2020 to help encourage investment, and has administrative, fiscal and budgetary autonomy.

"Prospera's flexible regulatory framework enables crypto-innovation and the use of Bitcoin by residents, businesses, and governments," Honduras Prospera said in a statement.

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The economic zone will also let municipalities, local governments and international firms issue bitcoin bonds from the area's jurisdiction.

Honduras Prospera covers parts of the picturesque Roatan island as well as the city of La Ceiba on Honduras' Atlantic Coast.

Neighboring country El Salvador adopted bitcoin as legal tender in September, the first country in the world to do so, although the roll-out was bumpy and mired in public skepticism.

In Honduras, the Central Bank has said it cannot vouch for cryptocurrency transactions.

"Any transaction carried out with this type of virtual asset falls under the responsibility and risk of the person carrying it out," the bank said in a March statement sent in response to queries on Thursday.

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Reporting by Gustavo Palencia in Tegucigalpa Writing by Valentine Hilaire Editing by Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.