Published on
April 24, 2026
UK Government Introduces Regulations Incorporating Stablecoins into Payment Services
HM Treasury to bring UK-issued stablecoins into payments regulation; draft amendments carve out payment services.
The United Kingdom is taking a significant step toward modernizing its financial landscape by integrating stablecoins into the regulatory framework for payment services. HM Treasury (HMT) has announced plans to update the UK payments regulations, carving stablecoins out of certain activities currently covered under the cryptoasset regime. This move is part of a broader effort to adapt to emerging financial technologies.
Draft Legislation Aims to Simplify Regulations
A draft statutory instrument proposes amendments to the existing Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026. These amendments aim to ensure that firms offering payment services using UK-issued qualifying stablecoins will not require a cryptoasset license for dealing or arranging activities. However, firms may still need permissions for safeguarding cryptoassets.
According to the proposed legislation, the carve-out will only apply to UK-issued stablecoins and will not extend to those issued overseas, which remain under the scope of cryptoasset dealing and arranging regulations. Lending and borrowing activities involving UK stablecoins will also remain subject to the crypto investments regime if they include dealing or arranging crypto activities.
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Preparing for Future Payment Reforms
The Amendment Regulations anticipate further changes that would fully incorporate UK-issued stablecoins into the country’s payment regulations. HMT has confirmed in a recent announcement that it will launch a consultation focused on establishing a unified framework for traditional and tokenized payments. The consultation will also explore adapting regulations for payments conducted by artificial intelligence (AI) agents and enhancing the Financial Conduct Authority’s (FCA) powers to develop new Open Banking payment methods.
"This consultation will kick-start a multi-year process to modernize payments regulation by giving the Financial Conduct Authority more flexibility to set rules for payment service providers", HMT stated.
A Long-Term Vision for Stablecoins and Payments
The proposed updates come months after the Cryptoasset Regulations 2026 established a regulatory framework for cryptoassets, including stablecoins. While the new regime will not come into force until October 2027, the draft amendments signal a progressive approach by the UK government to align payments regulation with technological advancements.
HMT is currently inviting feedback on the draft legislation until May 22, 2026. This input will shape the final regulations, ensuring they address both practical and policy considerations in the evolving payments ecosystem.
By introducing these targeted amendments and opening consultations, the UK government is positioning itself at the forefront of digital payment innovation, paving the way for a future where stablecoins are a seamless part of everyday financial transactions.
