On-shore VASP in Nicaragua

No Specific Licensing Regime: There are no specific licenses required or available for cryptocurrency exchanges, custody providers, or payment processors whose primary business involves virtual assets in Nicaragua.

Official Caution and Warnings: The Banco Central de Nicaragua (BCN) – the central bank – and the Superintendencia de Bancos y Otras Instituciones Financieras (SIBOIF) – the banking superintendent – have consistently issued communiqués warning the public about the risks associated with virtual currencies.

Virtual assets are not legal tender in Nicaragua.

Financial institutions regulated by SIBOIF are generally cautioned against dealing with virtual assets or providing services that facilitate their use, without explicit authorization, which is not currently granted for general crypto operations.

Neither exists specifically for virtual assets. Since there is no specific framework, there is no system for registration or licensing of VASPs.

Any entity attempting to operate a virtual asset business might find itself in a legal grey area, or, if its activities are deemed to encroach upon activities reserved for traditional financial institutions, it could be considered operating an unlicensed financial service.

General AML/CFT Laws Apply: While there isn't crypto-specific AML/CFT regulation, Nicaragua has general anti-money laundering and counter-terrorist financing (AML/CFT) laws that would theoretically apply to any financial transaction or business activity that could be used for illicit purposes.

Any entity conducting financial operations in Nicaragua, regardless of specific licensing, would be subject to the general framework designed to combat money laundering and terrorist financing. This would imply an obligation to conduct due diligence (KYC) on customers and report suspicious transactions to the Financial Analysis Unit (UAF).

Local Presence: Typically, a locally incorporated entity and potentially local management are required for regulated financial services.

There are no specific custodial license requirements for entities wishing to offer cryptocurrency or digital asset custody services in Nicaragua. Since cryptocurrencies are not recognized as regulated financial instruments, there is no licensing regime in place for their custodians.

Reference: The BCN and SIBOIF do not issue licenses for cryptocurrency-related activities.

There are no explicit rules mandating the segregation of client digital assets from the custodian's operational assets. In unregulated environments, this crucial protection is typically absent.

No specific legislation: Nicaragua has not publicly enacted specific laws or regulations that define VASPs, require their registration, or mandate the implementation of the FATF Travel Rule (Recommendation 16).

General AML/CFT Framework: Nicaragua does have a general Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) framework in place, primarily through Ley 977, "Ley Contra el Lavado de Activos, el Financiamiento al Terrorismo y el Financiamiento de la Proliferación de Armas de Destrucción Masiva" (Law Against Money Laundering, Terrorism Financing, and the Financing of the Proliferation of Weapons of Mass Destruction). However, this law, passed in 2018, predates the specific FATF VASP Guidance (2019) and does not explicitly include virtual assets or VASPs within its scope of regulated entities.

However, if entities dealing with virtual assets were to be considered financial institutions or subject to general AML/CFT obligations under Ley 977, failure to comply with general AML/CFT requirements (e.g., customer due diligence, suspicious transaction reporting) could lead to administrative sanctions, fines, or even criminal charges for money laundering offenses, as defined in the law.

Lack of Specific Legislation:

Absence of Reported Enforcement:

Corporate Income Tax: For businesses dealing with cryptocurrencies as part of their commercial activities (e.g., crypto exchanges, payment processors, companies accepting crypto for goods/services), all profits and income generated from these operations would be subject to the standard corporate income tax rate.

Services Related to Crypto: However, services provided by crypto-related businesses, such as transaction fees charged by cryptocurrency exchanges, brokerage fees, or consulting services related to virtual assets, would generally be subject to the standard 15% IVA if the service provider is located in Nicaragua and meets the relevant registration thresholds.

Valuation: Crypto assets must be valued at their fair market value (FMV) in Nicaraguan Córdobas (NIO) at the time of the taxable event.

Record Keeping: Meticulous record-keeping is crucial for demonstrating cost basis, calculating gains/losses, and justifying tax positions.