UK to merge payments rules for stablecoins and tokenized deposits

The UK Treasury said Tuesday it will consolidate payments regulation into a single framework covering traditional payment services, stablecoins and tokenized deposits. The package was published during Fintech Week in London.

Under the proposals, stablecoins used for payments would be brought under a new issuance regime. The Treasury said firms that provide stablecoin payment services would face reduced administrative requirements through new legislation.

The Financial Conduct Authority would gain expanded powers over Open Banking developments. The Treasury said it will explore regulatory changes for payment activity carried out by artificial intelligence agents and include measures to support tokenized wholesale financial systems.

Chris Woolard CBE, a partner at EY and former interim CEO of the FCA, was appointed Wholesale Digital Markets Champion to lead work on tokenized wholesale infrastructure. The Treasury pledged £1 million in funding for the Centre for Finance, Innovation and Technology beginning in April to support sector collaboration.

The Treasury plans a consultation on reforms to payment services and electronic money regulation as part of the ‘Leeds Reforms' and the government's ten-year plan to position the UK as the global center of choice for financial services. The consultation will set out detailed proposals and timelines for implementation.

Lucy Rigby, the City Minister, said the government views digital assets and blockchain technology as capable of reshaping how consumers and businesses access financial services. She said the package aims to build a payments ecosystem that is secure, competitive and ready to use new technology.

Anthony Yeung, chief commercial officer at CoinCover, welcomed the focus on stablecoins and tokenization but noted that regulation alone will not ensure adoption. He said market participation will depend on operational resilience, including custody frameworks, key management systems and disaster recovery arrangements within regulated environments.

The Treasury said the reforms aim to align the regulatory framework with technological change while preserving consumer protections and market integrity.