Paving the way for stablecoin payments
The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 were made in February 2026. These Cryptoasset Regulations establish a crypto regulatory regime, including the issuance of qualifying stablecoins in the UK. The regime comes into force in October 2027.
A draft statutory instrument now proposes amending the Cryptoasset Regulations. Among other changes, these Amendment Regulations seek to ensure that firms providing stablecoin payment services do not need to seek a licence for cryptoasset dealing or arranging activities.
Targeted amendments
The proposed carve-out applies only to dealing in cryptoassets, whether as principal or agent, and to arranging deals in cryptoassets. Under its upcoming reforms, the government will propose that safeguarding undertaken in the course of providing payments services should fall within the payments regime rather than the crypto regime. In the meantime, providers of stablecoin payment services may still need permission for safeguarding cryptoassets.
Lending and borrowing activities involving UK-qualifying stablecoins will remain within the scope of the crypto investments regime to the extent they involve crypto dealing or arranging activities.
The new carve-out also applies only to UK-issued qualifying stablecoins. Overseas-issued stablecoins remain within the scope of crypto dealing and arranging, for now. The government has signalled its intention to further consider the implications of this policy.
Modernising payments
The Amendment Regulations anticipate further legislative change which would bring UK-issued stablecoins into UK payments regulation. In a recent announcement, HMT confirms that it will soon open a consultation which will cover:
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Establishing a single, coherent framework for traditional and tokenised payments, including stablecoins and tokenised deposits;
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How regulation should adapt to payments conducted by AI agents; and
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Providing the FCA with new powers to support the development of new Open Banking payments within commercial schemes.
This consultation will kick-start a multi-year process to modernise payments regulation by giving the Financial Conduct Authority more flexibility to set rules for payment service providers.
