The Nicaragua crypto and payment service provider (PSP) license is a pivotal regulatory mechanism for businesses aiming to operate legally in digital finance and payment solutions within Central America. As global interest in emerging fintech hubs grows, Nicaragua has emerged as a strategic jurisdiction for companies seeking to establish a foothold in the region’s evolving financial ecosystem. This guide explores the legal framework, application process, benefits, compliance obligations, and key considerations for obtaining a PSP or Virtual Asset Service Provider (PSAV) license in Nicaragua.
Updated Regulatory Framework for Fintech in Nicaragua
Between 2020 and 2025, Nicaragua significantly overhauled its regulatory approach toward payment service providers (PSPs) and virtual asset service providers (PSAVs). A landmark development was the enforcement of the Regulation on Payment Service Providers and Virtual Asset Service Providers, approved by the Central Bank of Nicaragua (BCN) in April 2024. This new regulation replaced the earlier Fintech Payment Service Provider Regulation from September 2020 and introduced clearer standards for digital financial operations.
Under the updated rules, any entity offering one or more of the following services must register with BCN and obtain a PSAV license:
- Exchanging cryptocurrencies for fiat currencies
- Converting between different digital assets
- Providing custody, management, and transfer services for digital assets (including security and technical support)
- Offering financial advisory, brokerage, or intermediary services during tokenized asset issuance and distribution
Licenses issued under this regime are indefinite in duration, non-transferable, and cannot be used as collateral. Notably, institutions already regulated by the Banking and Financial Institutions Supervision Agency (SIBOIF) or the National Committee for Microfinance (CONAMI)—such as banks acting as PSPs—do not need to apply for a separate license but must still register and comply with the regulation.
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All applicants must register with the Financial Intelligence Unit (UAF). While UAF registration proof can be submitted up to 15 business days after applying to BCN, full compliance is mandatory before final approval.
Strategic Advantages of a Nicaragua PSP/PSAV License
Despite its modest economy, Nicaragua offers compelling opportunities for fintech entrepreneurs targeting Latin America and the Caribbean.
Access to a Growing Regional Fintech Ecosystem
Nicaragua’s integration into Central America’s economic framework positions it as a gateway for regional expansion. Holding a PSP or PSAV license enables companies to participate in innovative sectors such as:
- Digital wallets and mobile POS systems
- Cross-border remittances
- Distributed ledger technology (DLT) applications
- Tokenization platforms
This access facilitates partnerships with local financial institutions and integration into regional payment networks.
Pathway for Cross-Border Expansion
A Nicaragua-based license may serve as a springboard into broader Latin American markets. Although international recognition of Nicaraguan licenses is still developing, the country’s alignment with emerging regulatory principles—such as AML/CFT compliance and consumer protection—enhances credibility with regional counterparts.
For startups targeting underserved markets in Central and South America, establishing a regulated presence in Nicaragua can be a cost-effective first step toward regional scalability.
Core Requirements for PSP and PSAV Licensing
To qualify for a Nicaraguan PSP or PSAV license, applicants must meet several structural, operational, and compliance-related criteria.
Corporate Structure and Registration
Applicants must incorporate a legal entity in Nicaragua. The most common form is a Sociedad Anónima (SA)—a corporation requiring at least one director and two shareholders (who may be foreign nationals). The minimum registered capital is just $1, making entry accessible.
Key steps include:
- Registering the company with local authorities
- Appointing an independent auditor
- Preparing corporate bylaws and governance documents
Management Qualifications
Regulators assess the professional competence of company directors and senior managers. Experience in financial services, risk management, cybersecurity, or payments is essential. In some cases, appointing individuals with formal financial regulatory credentials strengthens the application.
Technology and Security Standards
Applicants must demonstrate that their payment or crypto platform meets national standards for:
- Data encryption and user privacy
- Fraud detection and prevention systems
- Resilience against cyber threats
- Secure transaction processing infrastructure
Robust internal controls are not optional—they are central to gaining regulatory trust.
Step-by-Step Licensing Process
Step 1: Incorporate Your Company
Establish a Nicaraguan legal entity, preferably an SA. Ensure all shareholder information—including ultimate beneficial owners (UBOs) holding 5% or more—is documented and submitted to the commercial registry.
Step 2: Develop Internal Policies and Governance
Prepare comprehensive documentation outlining:
- Corporate governance structure
- Risk management framework
- Anti-fraud procedures
- Data protection protocols
- Internal audit mechanisms
These policies reflect your commitment to transparency and accountability.
Step 3: Draft a Comprehensive Business Plan
Your business plan should cover:
- Market analysis and competitive landscape
- Target customer segments
- Revenue model and fee structure
- Three-year financial projections
- Operational costs, staffing plans, and funding sources
Regulators scrutinize these details to assess viability and long-term sustainability.
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Step 4: Submit Application to BCN
Submit all required documents to the Central Bank of Nicaragua. These include:
- Certified copies of incorporation documents
- Board member identification and authorization letters
- Technical system architecture overview
- Contracts with third-party vendors (if applicable)
- Financial forecasts and capital adequacy statements
BCN may request additional information or initiate inter-agency consultations with SIBOIF, CONAMI, or UAF.
Step 5: License Approval and Publication
If approved, the license must be published in Nicaragua’s official gazette, La Gaceta, within 90 calendar days of issuance. Only then does it become legally enforceable.
Mandatory Compliance: Financial Forecasting and Ongoing Obligations
The Critical Role of Financial Projections
A realistic three-year financial forecast is crucial. Regulators evaluate:
- Projected transaction volumes
- Expected revenue streams
- Operating expenses (including salaries, software licensing, maintenance)
- Capital reserves and liquidity buffers
Failure to present credible financial modeling often results in rejection. Demonstrating preparedness for market downturns—through cost optimization strategies or diversified income—signals strong risk awareness.
Post-License Responsibilities
Once licensed, entities must:
- Maintain separate accounts for client funds and operational capital
- Guarantee immediate withdrawal rights for users’ electronic money or virtual assets
- Disclose all fees, risks, and service terms clearly on public platforms
- Submit regular reports to BCN on transactions, compliance status, and system performance
Transparency is non-negotiable.
License Suspension or Revocation
The BCN reserves the right to suspend or revoke a license if:
- Fraudulent or illegal activity is confirmed
- A final court order mandates closure
- The institution threatens national payment system stability
- No regulated activity occurs within one year of licensing—or operations cease for 12 consecutive months
Voluntary cancellation is possible via formal request. If complete documentation is provided, BCN must process the request within 50 working days.
Emerging Legal Considerations for Licensed Operators
Based on consultations with existing license holders, several legal gray areas require attention:
- Need for Regulatory Flexibility: Current rules may not accommodate fully remote or decentralized business models without physical entities.
Unregulated Services: Certain fintech innovations fall outside the current scope of the regulation, including:
- Peer-to-peer (P2P) lending platforms
- Smart contracts executed via simple declarations
- Personal finance management tools linked to external accounts
- Cryptocurrency trading without custodial oversight
These gaps highlight the need for ongoing regulatory evolution to keep pace with technological innovation.
Frequently Asked Questions (FAQ)
Q: Is there a minimum capital requirement for a PSP/PSAV license in Nicaragua?
A: While no fixed minimum capital is specified in law, applicants must prove sufficient funding to sustain operations. Realistic financial projections are key to demonstrating viability.
Q: Can foreigners own a licensed fintech company in Nicaragua?
A: Yes. Foreign individuals or corporations can fully own a Nicaraguan SA. However, ultimate beneficial ownership must be transparently disclosed.
Q: How long does the licensing process take?
A: The timeline varies but typically ranges from 6 to 12 months, depending on application completeness and regulatory review speed.
Q: Are cryptocurrency exchanges allowed under the PSAV license?
A: Yes. Exchanges facilitating crypto-to-fiat or crypto-to-crypto trades are explicitly covered under PSAV regulations.
Q: Must all documents be in Spanish?
A: Yes. All submissions to BCN must be in Spanish or accompanied by certified translations.
Q: Can I operate internationally with a Nicaraguan PSP license?
A: While not automatically recognized abroad, the license provides a solid compliance foundation that can support expansion into other Latin American jurisdictions.
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Conclusion
Nicaragua’s updated regulatory environment presents a promising opportunity for fintech and crypto entrepreneurs targeting Central America. With clear pathways for obtaining PSP and PSAV licenses, relatively low entry barriers, and growing regional connectivity, the country is positioning itself as a viable hub for digital finance innovation.
Success hinges on meticulous preparation—especially regarding corporate structuring, compliance frameworks, financial forecasting, and transparent governance. By aligning with BCN’s expectations and maintaining rigorous operational standards, businesses can leverage their Nicaraguan license as a strategic asset in the broader Latin American market.
For companies navigating this landscape, expert legal guidance ensures faster approvals, reduced risk, and long-term regulatory resilience.