Fintech licenses in Nicaragua

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Mónica Brenes

Financial innovation in Nicaragua has found a regulatory framework through the Regulation of Financial Technology Providers of Payment Services and Virtual Asset Service Providers, issued by the Central Bank of Nicaragua (BCN). This regulation, in force since 2023, establishes guidelines for granting licenses to companies that wish to operate in the country’s Fintech ecosystem. The main types of licenses, their essential characteristics, the profile of applicants, the authorization procedure, and the fundamental requirements are described below.

The Regulation provides for two types of licenses:

    • License for Financial Technology Payment Service Providers (PSP).
    • License for Virtual Asset Service Providers (PSAV).

I- License for Financial Technology Payment Service Providers (PSP)

  1. Main characteristics:
    • Authorizes the provision of payment services through technological platforms, including digital wallets, fund transfers, mobile points of sale, electronic money, electronic currency trading and exchange, and online payment gateways.
    • Allows acting as a technological intermediary between end users and traditional financial institutions.
  1. Intended for:
    • Nicaraguan or foreign companies duly incorporated in Nicaragua that wish to offer electronic payment services. These companies must have a specific purpose.
  1. Authorization process timeline:
    • The Central Bank must resolve the request within a maximum period of 90 business days from the date of submission of all required documentation.
  1. Main requirements:
    • Legal incorporation as a commercial company in Nicaragua.
    • Risk prevention policy manuals, including money laundering prevention.
    • Secure technology platform.
    • Business plans include market analysis, financial projections, and operating model, among others.
    • Compliance with personal data protection regulations.
    • Others established in the Regulations.

II- License for Virtual Asset Service Providers (PSAV)

  1. Main features:
    • Authorizes the provision of services related to virtual assets, such as their exchange, custody, administration, and transfer.
    • The license does not convert PSAVs into traditional financial entities, nor does it authorize them to offer banking services.
  1. Intended for:
    • Companies that operate virtual asset platforms (e.g., cryptocurrencies, among others).
  1. Authorization process timeline:
    • Similar to PSPs, the timeline is 90 business days from the complete submission of documents.
  1. Main requirements:
    • Legal incorporation in Nicaragua;
    • Implementation of regulatory compliance controls and terrorist financing prevention programs.
    • Have a robust identity verification system (KYC).
    • Submission of cybersecurity policies;
    • Clear liability agreements with virtual asset users.
    • Others established in the Regulations.
  1. Aspects common to both licenses
    • Supervision: Once the license is granted, companies are subject to supervision by the Central Bank of Nicaragua and must submit periodic reports on operations, risk management, and regulatory compliance.
    • Renewal: The license is valid indefinitely but may be revoked in the event of non-compliance with regulatory obligations.

For startups and technology companies interested in the Fintech sector, this Regulation represents an opportunity to operate formally within the legal framework in Nicaragua.