On April 27th of this year, the “Regulations for Financial Technology Providers of Payment Services and Virtual Asset Service Providers” (“Regulations”), issued by the Central Bank of Nicaragua (“BCN”) through resolution number CD-BCN-XXV-1-22, which replaced the “Regulations for Financial Technology Providers of Payment Services” published in September 2020 and its amendments, became effective.
Since the entry into force of the first Regulation (2020) to date, approximately 12 institutions have registered with the BCN as Payment Services Financial Technology Providers (“PSP”). Among them are most of the banks authorized to operate in the country and Fintech companies, which offer payment services such as digital wallets, mobile points of sale, electronic money, electronic currency trading and exchange service, funds transfer service and/or online payment gateways.
With the publication of this new Regulation, Virtual Asset Service Providers (“PSAV”) that perform one or more of the following activities or operations for or on behalf of another natural or legal person must also register and apply for a license before the BCN: exchange between virtual assets and fiat currencies, exchange between one or more forms of virtual assets, transfer of virtual assets, custody and/or administration of virtual assets or instruments that allow control over virtual assets and participation and provision of financial services related to the offer of an issuer and/or sale of a virtual asset.
The licenses granted to these providers are valid indefinitely and may not be assigned, transferred or disposed of to third parties, nor may they be granted as collateral. Financial institutions supervised and regulated by the Superintendency of Banks and Other Financial Institutions (“SIBOIF”) and by the National Microfinance Commission (“CONAMI”) that provide services as PSPs and banks subject to supervision and regulation by the SIBOIF that provide services as PSAVs will not be required to apply for a license before the BCN; however, they must register before the BCN and will be subject to the other provisions established in the Regulation.
This new Regulation establishes the requirements to obtain a license and registration for PSPs and PSAVs, as well as the obligations they must comply with and the infractions, fines and reasons for suspension of licenses and registrations.
Likewise, institutions wishing to offer services as PSPs and/or PSAVs must register with the Financial Analysis Unit (“UAF”) and submit their registration certificate as a requirement to obtain their operating license and registration with the NCB. The Regulation grants the benefit of not submitting the registration certificate before the FAU prior to the application for the license before the NCB to PSPs and/or PSAVs that have been recently incorporated or that at the date of initiation of the procedure before the NCB are not registered as Regulated Entities before the FAU. However, once their application for registration or license is authorized, they must submit to the NCB the certificate of registration with the FAU within a period not exceeding 15 working days after its issuance.
We consider that with the approval of this new regulation, a favorable ecosystem for the provision of financial technology services of payment services, as well as services linked to virtual assets, which, of course, include cryptocurrencies, is being regulated in a more complete and accurate manner.
For any additional information, please do not hesitate to contact our Financial Law specialists Rodrigo Taboada and Monica Brenes.