On May 17, 2021, Law No. 1072, Law of Reform and Additions to Law No. 977, Law against money laundering, terrorist financing and proliferation of weapons of mass destruction financing(LA / FT / FP in Spanish) and addition to Law No. 561, General Law of banks, non-bank financial institutions and financial groups was published in The Official Gazette; this law came to regulate to the virtual asset service providers, in compliance with the provisions of recommendation 15 of the Financial Action Group (GAFI in spanish).
In that sense, to the list of obliged subjects contemplated in the law is added the Virtual Asset Service Providers who will be supervised by the Financial Analysis Unit (Article 9, numeral 3, literal a, subsection vi).
Consequently, the law defines what will be considered as virtual assets, fiat currency and virtual asset service provider, establishing that:
– A virtual asset is a digital representation of value that can be traded or transferred digitally and can be used for payments or investments. Virtual assets do not include digital representations of fiat currency, securities, and other financial assets.
– Fiat currency is the legal tender, which according to national legislation is issued exclusively by the Central Bank of Nicaragua and is used and accepted as a legal means of payment. Fiat currencies can be represented through digital currency.
– Virtual asset service providers, are the people who carry out one or more of the following activities or operations, for or on behalf of another natural or legal person:
- 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 “.
Having, from now on these (virtual asset service providers), the obligation to register themselves before the Financial Analysis Unit and comply with the provisions of Law No. 977, Law against money laundering, terrorist financing and financing to the proliferation of weapons of mass destruction in relation to reporting, detection and prevention of activities related to ML / FT / FP.
Another relevant aspect to mention is that the law amends the Article 53 of Law No. 561, General Law of Banks, Non-Banking Financial Institutions and Financial Groups, in relation to the operations that banks may carry out, establishing that they may provide virtual asset services.
This is undoubtedly the first step in the regulation of electronic operations or transactions in the country, so it is very likely that new regulations or special laws will be issued to systematize the operation of virtual asset service providers.
If you need more information about it, please do not hesitate to contact us.