Today, HM Treasury introduced new measures to improve the payments sector and boost the ecosystem’s competitiveness. The policy incorporates items such as stablecoins, tokenized deposits, and more.
HM Treasury highlights the fact that over 3000 Fintech firms operate in the UK, with the sector attracting over £2.6 billion in investment last year.
The UK has long been a key global financial center, and if policymakers do not support Fintech, the UK will fall behind.
Economic Secretary to the Treasury, Lucy Rigby, commented on the announcement, noting that Fintech is a British success story and they are supporting innovation in financial services so the UK can maintain its competitive edge.
“Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive, and fully equipped to harness the opportunities created by rapid technological change.”
Chris Woolard, the new Wholesale Digital Markets Champion who previously served as the FCA’s innovation leader, said that tokenized assets are replacing manual methods and that both private and public entities must work together to ensure success.
“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.”
The government recognizes that digital assets and blockchain technology will transform financial services, and a framework must be in place to support their development.
The objectives of the policy include:
- Improving the regulation of payment services and electronic money by integrating it with the UK’s core regulatory approach for financial services. This will mean establishing a single, coherent framework for both traditional and tokenized payments, including both stablecoins and tokenized deposits.
- Regulating stablecoins for their use in payments, where these stablecoins have been issued under the forthcoming new regulated activity for stablecoin issuance in the UK.
- Exploring how the regulation of payments services should adapt to payments conducted by AI agents.
- Providing the FCA with new powers to regulate the future of Open Banking, which will include underpinning the development of new Open Banking payments within commercial schemes.
Nigel Brook-Walters, Chief Revenue Officer at COINPAYMENTS, said the announcement shows the government understands the structural shift happening today and the need to be in a leadership position.
“The move to establish a coherent regulatory framework for both traditional and tokenised payments, combined with the appointment of a Wholesale Digital Markets Champion, sends exactly the right signal to international markets,” said Brook-Walter. “Whilst regulation creates the conditions for growth; infrastructure and education deliver it. What cannot be forgotten is the need for industry collaboration to translate regulatory progress into practical capability for merchants and enterprises that frees them from the failures of legacy payment systems and enables them to thrive in the digital assets economy”
Head of Payments at RedCompass Labs, Pratiksha Pathak, said the HM Treasury statement was a welcome and well-timed move by the government. She noted that banks, Fintechs, and others are already building stablecoin infrastructure, and regulatory clarity is imperative.
“Bringing stablecoins and tokenized deposits into a unified framework alongside traditional payments is the right direction, but the detail will matter enormously, not least how the regime distinguishes between different token types that carry very different risk profiles. Firms operating across both the UK and EU will also be watching closely to understand how this interacts with MiCA, and whether it creates alignment or new friction,” said Pathak.
She added that AI-driven payments are also significant as autonomous financial transactions at scale are no longer a distant prospect.
“The real test will be execution, particularly the speed and workability of the FCA’s authorisation process. The UK has a genuine opportunity to lead here, but that window won’t stay open indefinitely.”
A consultation on the updates to the payments ecosystem is expected soon.
