UK to rewrite payments rules for stablecoins, tokenized deposits

HM Treasury will consult on changes to payments and electronic money rules to place tokenized instruments such as stablecoins and tokenized deposits in the same regulatory framework as conventional payment methods, the department announced Tuesday at UK Fintech Week in London. Economic Secretary Lucy Rigby presented the package.

The consultation will cover how payment services and e-money are regulated and will propose legislation intended to reduce administrative burdens for firms offering stablecoin payment services. The government said the reforms are designed to lower regulatory friction for companies that want to offer stablecoin-based payments and to attract digital asset businesses to the UK.

The package emphasizes deeper integration of stablecoins and tokenized deposits into the payments system and support for wider use of tokenized assets in wholesale markets. As part of the plan the Treasury named former Financial Conduct Authority executive Chris Woolard as digital markets champion for the Wholesale Financial Markets Digital Strategy. Woolard will promote tokenization in financial markets and coordinate engagement between private and public sector participants.

The Treasury will also examine how payment regulation should apply when artificial intelligence agents execute transactions on behalf of consumers or businesses. Philip Belamant, co-founder of fintech firm Zilch, predicted that AI will “fundamentally change how people interact with money” and called on regulators to update rules to protect consumers while allowing innovation.

This will mean establishing a single, coherent framework for both traditional and tokenized payments, including both stablecoins and tokenized deposits,

Lucy Rigby stated.

The consultation will seek to identify where existing rules should be amended to cover tokenized products and where separate requirements remain necessary.

Officials described the measures as part of wider work to develop a coherent crypto guidance. Draft legislation for the broader crypto framework is in development and is expected to take effect in 2027. The payment-specific reforms are intended to sit alongside that legislation and address particular frictions in payments and market infrastructure.

The Treasury said it will invite input from firms, market infrastructure providers and consumer groups as it develops the consultation and draft rules. The package was presented during industry events at UK Fintech Week supported by organizations including Innovate Finance.