UK Treasury Overhauls Payments Rules for Stablecoins

The United Kingdom's HM Treasury announced on Tuesday a major overhaul of its payments regulations to integrate stablecoins and tokenized deposits into a unified framework alongside traditional services, aiming to bolster innovation in digital finance. The reforms, unveiled during UK Fintech Week in London, include consultations on updating payment services and electronic money rules, with legislation expected to take effect in 2027.

Economic Secretary to the Treasury Lucy Rigby described the initiative as a step to modernize oversight and support the sector's growth. The plan establishes a single regulatory structure that treats stablecoins used for payments under a new issuance regime, aligned with existing laws, while incorporating tokenized deposits as digital representations of bank holdings on blockchain systems. This approach seeks to reduce fragmentation, ensuring clear licensing, supervision, and prudential standards for entities involved in tokenized payment services.

To ease market entry, the government will introduce measures to cut administrative burdens for companies offering stablecoin services, including streamlined approvals and alignment of electronic money...