The UK government has set out a new plan to bring stablecoins and tokenized deposits into a more unified payments rulebook.
The plan, announced by HM Treasury on Tuesday during Fintech Week in London, aims to create a clearer framework for both traditional and tokenized forms of money while maintaining consumer safeguards.
Under the new approach, rules for payment services and electronic money will follow the UK’s main financial services framework. This creates one clear system for both traditional payments and newer tokenized forms, including stablecoins and tokenized deposits.
City Minister Lucy Rigby said, “The government intends to modernise payment services regulation and update it to support new innovations in money and payments, ahead of soon publishing a consultation inviting the payments sector to feedback.”
What the new rules cover
The government will regulate stablecoins when people use them for payments and when they are issued under a new UK-approved activity. This means only approved stablecoins that meet strict rules can operate in the UK payments market.
The plan also looks at payments made by AI agents. These are software programs that can act for users. As artificial intelligence becomes more common in finance, regulators want to make sure these payments stay safe and well-controlled.
Another key part of the plan gives the Financial Conduct Authority (FCA) new powers. These powers will help shape the future of Open Banking.
Open Banking enables customers to share safely all their financial information with other providers. This helps new payment services grow. With these changes, the FCA can support new Open Banking payment systems while maintaining strong security standards.
Driving adoption through leadership and funding
To move the plan forward, the government appointed Chris Woolard CBE as its first Wholesale Digital Markets Champion.
Woolard is a partner at EY and a former interim chief executive of the FCA. He will lead work to help build a tokenized wholesale financial markets system in the UK.
“It’s an honour to be appointed Digital Markets Champion for the UK’s Wholesale Financial Markets Digital Strategy,” he said.
“UK fintech benefits from Britain’s world leading financial services sector offering a thriving start-up ecosystem, global banks and insurers, leading universities, and a regulator that engages with innovation early so firms can test, learn and scale responsibly.” Woolard added.
Woolard will collaborate with regulators and industry companies to facilitate this change and enhance the UK’s position in digital finance.
The plan also includes an extra £1 million in funding for the Centre for Finance, Innovation and Technology (CFIT) from April 2026. The funding will assist CFIT to unite fintech companies and tackle the major issues in the industry.
In addition, the government will simplify oversight by bringing the Payments Systems Regulator into the FCA. This move is meant to reduce duplication and create a more efficient regulatory system.
Government backs fintech growth and future payments
Lucy Rigby said the UK wants to help fintech firms move further and faster in supporting growth. She said the plan sets a clear direction for a payments system that is secure, competitive, and ready for rapid technological change.
“Fintech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth,” Rigb noted.
The UK already has over 3,000 active fintech companies, and the industry attracted an investment of £2.6 billion in 2020 alone. With such changes, the government is interested in continuing such growth but ensuring that the rules do not fall behind the new technology.
The government is also preparing to launch a formal consultation and invite feedback from the payments industry.
This will provide firms and other stakeholders with the opportunity to express their opinions and assist in developing the final rules before they are presented.
The plan is part of the wider Financial Services Growth and Competitiveness Strategy, also called the Leeds Reforms. Through this strategy, the UK has set out a 10-year goal to become a leading destination for financial services investment.
Separately, the UK FCA officially opened a consultation on April 15 on guidance for the country’s future crypto regime, with new rules due this summer.
The regulator said firms can start applying for authorization from September 2026, before the wider regime takes effect in October 2027 as planned.