The U.K. government unveiled a comprehensive package of measures aimed at updating the regulatory framework for the country’s payment infrastructure. The initiative is designed to support the adoption of stablecoins, tokenized financial instruments, and AI-powered payment solutions.
Lucy Rigby, Economic Secretary at HM Treasury, announced during London Fintech Week that the government is ready to modernize payment regulations and plans to further develop the digital asset market by allocating additional funding to industry initiatives.
A key element of the reform will be the creation of a unified regulatory model for the payments market, including the use of stablecoins and tokenized deposits. The government intends to integrate the regulation of payment services and e-money into a single financial oversight system, ensuring flexibility amid rapid technological change while maintaining strong consumer protection.
The initiative includes expanding regulatory rules for stablecoins as a payment instrument. Authorities are also considering adapting regulations to cover transactions carried out by AI agents, which could execute payments on behalf of users and businesses. In addition, the Financial Conduct Authority (FCA) will receive expanded powers to advance open banking, including the rollout of new payment solutions within commercial frameworks.
Another focus of the initiative is reducing the administrative burden on companies working with stablecoins, which is expected to accelerate their adoption and strengthen the U.K.’s position in the digital asset market. At the same time, the government confirmed plans to merge the Payment Systems Regulator (PSR) with the FCA to streamline the supervisory structure.
Chris Woolard, Partner at Ernst & Young and Former Interim CEO of the FCA, was appointed as Wholesale Digital Markets Champion. He’ll oversee the development of infrastructure for tokenized wholesale financial markets and coordinate the implementation of the government’s digital strategy.
An additional £1 million (~$1.35 million) was allocated to support the Centre for Finance, Innovation and Technology (CFIT). Authorities view tokenization and blockchain technologies as key drivers of transformation in the financial services sector and aim to strengthen the U.K.’s competitive position globally.
According to the government, more than 3,000 FinTech companies operate in the U.K., supporting tens of thousands of jobs. In 2025, the sector attracted over £2.6 billion (~$3.52 billion) in investment.
The FCA initiated the development of a regulatory framework for stablecoins in 2026, describing them as a foundation of new digital infrastructure and beginning to test stablecoin-based services within a regulatory sandbox involving local FinTech firms. At the same time, U.K. financial regulators are actively testing various use cases for tokenized traditional financial (TradFi) assets in controlled environments, while also working on the adoption of AI and distributed ledger technology (DLT) solutions to transform financial markets.
