ESMA Q&A 2949: CASPs must move client funds from payment institutions by next business day

The question, dated 28 August 2026, asked whether an authorised CASP may park clients' funds for a short time with a non-bank payment service provider, such as an e-money institution or a payment institution, and whether funds may stay longer in a bank account that the provider has opened for the CASP. ESMA answered on 6 October 2026 and published the Q&A on 16 October 2026 in its "New Q&As available" news item.

ESMA's answer covers funds the CASP receives either directly from clients or from third parties on their behalf. The CASP may hold them temporarily in a payment account with a non-bank payment service provider. During that time it must keep complying with the safeguarding duty in Article 70(2) of MiCA. No later than the end of the business day after the day the funds arrived, it must place them in an account with a credit institution or a central bank, as Article 70(3) of MiCA requires.

ESMA says the account at the credit institution or central bank "must be opened and maintained directly in the name of the CASP or otherwise in accordance with the applicable legal asset segregation arrangement". An account held in the name of a non-bank payment service provider does not meet Article 70(3), because "the CASP would retain a claim against the payment service provider rather than being the account holder vis-à-vis the credit institution".

This is so even where the account was set up specifically for the CASP and is technically segregated from other accounts. A dedicated or segregated account held in the payment provider's name at a credit institution is therefore not enough once the next-business-day limit has passed.

Article 70(2) of MiCA requires a CASP whose business model or services involve holding clients' funds other than e-money tokens to have adequate arrangements to safeguard clients' ownership rights and to prevent the use of those funds for its own account. Article 70(3) requires it to place those funds with a credit institution or a central bank by the end of the business day after receipt, in an account separately identifiable from any account holding the CASP's own funds.

Article 70(4) allows a CASP to provide payment services linked to its crypto-asset services itself or through a third party, provided whoever provides them is authorised under Directive (EU) 2015/2366. Under Article 70(5), paragraphs 2 and 3 do not apply to CASPs that are themselves e-money institutions, payment institutions or credit institutions. For background, see our study note on safeguarding client assets.

The answer interprets rules that already apply, so there is no transition period. CASPs authorised in Cyprus that use e-money or payment institutions to collect or pay out client funds should map each flow and check how long funds stay with the payment provider before they reach a credit institution or central bank.

For every account that holds client funds after that point, check whose name it is in. Where the account is held by a payment provider, even as a dedicated or segregated account, arrange for the funds to move to an account opened in the CASP's own name, or under the applicable legal asset segregation arrangement, by the end of the next business day. Record the review and update safeguarding procedures and reconciliations. See also our study note on CASP organisational requirements and our study note on CASP registration and MiCA.