UK Moves to Regulate Stablecoins and Tokenized Deposits

TLDR

• The UK Treasury introduced a unified payments framework covering traditional services, stablecoins, and tokenized deposits.

• The government will regulate payment stablecoins under a new issuance regime within the existing payments law.

  

• The Financial Conduct Authority will gain expanded oversight over Open Banking and certain AI-driven payment activities.

• The Treasury plans to reduce administrative requirements for firms providing stablecoin payment services.

• Chris Woolard CBE will lead the development of tokenized wholesale financial markets as Digital Markets Champion.

The UK government has introduced a unified payments framework covering traditional services, stablecoins, and tokenized deposits. The Treasury presented the plan during London Fintech Week and outlined legislative and regulatory changes. Officials said the reforms will modernize payments oversight and support innovation across digital finance.

Stablecoin Oversight and Tokenization Framework

The Treasury confirmed it will regulate stablecoins used for payments under a new issuance regime. It said the framework will integrate stablecoins into existing payment laws while maintaining clear supervisory standards.

Officials also plan to reduce administrative requirements for firms offering stablecoin payment services. The government will introduce legislation to streamline approvals and align electronic money rules with digital asset activity.

The Financial Conduct Authority will gain expanded powers over Open Banking developments. The Treasury said it will also examine regulatory adjustments for payment activities conducted by AI agents.

City Minister Lucy Rigby said fintech remains a “true British success story.” She added, “Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive, and fully equipped.”

The Treasury stated that digital assets and blockchain systems can reshape financial services delivery. It said the UK aims to lead this transition through its regulatory structure and financial services base.

Industry Leadership and Funding Commitments

The government appointed Chris Woolard CBE as Wholesale Digital Markets Champion. Woolard currently serves as a partner at EY and previously led the FCA as interim chief executive.

He will oversee the development of tokenized wholesale financial systems. The Treasury said he will coordinate industry and regulatory efforts to advance distributed ledger infrastructure.

The Treasury committed £1 million, equivalent to $1.35 million, to the Centre for Finance, Innovation and Technology. Funding will begin in April to support collaboration across the sector.

Officials confirmed plans to consult on reforms to payment services and electronic money regulation. They said the review aligns with the Leeds Reforms and a ten-year strategy for financial services.

Anthony Yeung, chief commercial officer at CoinCover, addressed the policy direction. He said, “The Government’s ambitions for a payments ecosystem and its focus on stablecoins and tokenisation are directionally right.”

Yeung added that regulation alone will not drive adoption across institutions. He said operational resilience, including custody and disaster recovery systems, will determine participation.

He stated that trust in digital assets depends on secure access and control. The Treasury said it will publish further consultation details in due course.

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