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The United Kingdom (UK) government is preparing to update payment regulation so stablecoins and tokenized deposits can sit inside the same framework as traditional payment services. HM Treasury announced the plan during Fintech Week in London and said it will soon publish a consultation on reforms to payment services and electronic money rules.
The proposal is aimed at bringing new forms of digital money into the payments perimeter without leaving them in a separate crypto category. The treasury said the goal is a single framework for traditional and tokenized payments, including stablecoins and tokenized deposits.
Stablecoins Would Move Into Payments Law
The government said payment stablecoins would be regulated through the UK’s planned stablecoin issuance activity. That sits alongside the wider cryptoasset regime, which already sets out planned rules for qualifying stablecoin issuance, custody, trading platforms, dealing, arranging and staking.
An earlier Treasury policy note said a UK stablecoin issuer would fall inside the perimeter if it offers, redeems or maintains the value of a qualifying stablecoin from a UK establishment. It also said the new activity is meant to avoid treating stablecoin issuers as deposit-takers simply because they issue fiat-backed tokens.
Tokenized Bank Deposits Get Equal Footing in the New Framework
The payments plan also brings tokenized deposits into the same policy discussion. These are bank deposits represented on digital rails, rather than non-bank stablecoins issued against reserve assets.
Tokenized deposits keep the claim inside the banking system, while stablecoins use a separate issuance model. By naming both in the payments package, Treasury is leaving room for both approaches instead of choosing one model of digital money at this stage.
UK Promises Less Admin Burden and New FCA Powers Over Open Banking
Treasury also said it will bring forward legislation to reduce administrative burdens for firms that want to offer stablecoin payment services. The same package includes new FCA powers over the future of Open Banking and the appointment of former FCA interim chief Chris Woolard as Wholesale Digital Markets Champion.
The Bank of England is still working on separate rules for systemic sterling stablecoins. Deputy Governor Sarah Breeden told lawmakers in March that the central bank remained open to revising its proposals, including reserve requirements and temporary holding limits, with draft rules due for consultation in June.
For crypto firms, banks and payment companies, the proposal shows the UK moving from policy outlines toward working rules for digital money. The consultation will show whether firms get enough certainty to build payment products before the broader crypto regime takes effect.
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Fhumulani Lukoto
Cryptocurrency Journalist
Fhumulani Lukoto holds a Bachelors Degree in Journalism enabling her to become the writer she is today. Her passion for cryptocurrency and bitcoin started in 2021 when she began producing content in the space. A naturally inquisitive person, she dove head first into all things crypto to gain the huge wealth of knowledge she has today. Based out of Gauteng, South Africa, Fhumulani is a core member of the content team at Coin Insider.