Stablecoin Payments in the UK: The Regulatory Landscape Just Changed

The UK stablecoin framework has been in motion for years. Since April 2026, it has moved faster than at any point in that journey, HM Treasury published draft amendments in April, the Bank of England made a significant policy reversal on 19 May at CityWeek 2026, and the House of Lords added parliamentary pressure on 2 June. For payments and RegTech leaders, the picture looks materially different today than it did at the start of the year and with revised draft rules due this month and final Codes of Practice expected before year-end, it will look different again by September 2026.

Here is where things actually stand.

The Crypto SI Is Made. The Payments Question Was Not Resolved.

The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, bringing qualifying stablecoins into FSMA, was made on 4 February 2026, coming into force in full on 25 October 2027. FCA authorisation will be required for any firm performing a specified activity in relation to a qualifying cryptoasset by way of business in the UK.

What the February SI left unresolved was a structural problem specific to payments firms: without appropriate amendments, stablecoin payments firms faced authorisation under multiple overlapping regimes simultaneously. HM Treasury addressed this in April, proposing to exclude firms providing stablecoin payment services from needing separate permissions for dealing or arranging activities where those activities arise from payment services. For firms whose primary activity is payments, not trading or custody, this is a meaningful simplification. The consultation closed on 22 May 2026.

The FCA Gateway Opens in September

The FCA gateway for firms seeking authorisation under the cryptoasset regime opens in September 2026, the same month as the 6th Financial Innovation Forum. The FCA's sandbox for stablecoin issuers, open since January 2026, is the parallel track for firms wanting to test products before the full regime applies.

The Bank of England's Significant Policy Shift

On 19 May at CityWeek 2026, Bank of England Deputy Governor Sarah Breeden confirmed the central bank signalled it is moving away from its proposed individual holding limits, £20,000 per individual and £10 million per business, shifting instead toward aggregate issuance caps placed on token providers. Aggregate caps regulate the issuer directly rather than monitoring individual accounts, making them more enforceable on decentralised networks and less disruptive to product design.

Revised draft rules from the Bank of England are expected in June 2026, though no date has been confirmed, with final Codes of Practice targeted for the second half of the year.

The Transition Problem Remains Open

The reversal has not resolved what the industry considers the most consequential structural question. A firm can build under FCA rules, grow a user base, and then find that the moment its stablecoin reaches systemic scale, it crosses into the Bank of England's regime, where reserve requirements and regulatory intensity are materially higher. How that transition happens without a sudden cliff-edge in compliance obligations remains unanswered. The BoE and FCA joint approach document, expected in 2026, is where the answer should appear. It has not yet been published.

The House of Lords Weighed In - 2 June 2026

On 2 June, the House of Lords Financial Services Regulation Committee called on the Bank of England to reconsider its proposed restrictions, advising against pre-emptive holding limits and challenging the requirement for issuers to hold 40% of backing assets in unremunerated central bank deposits. Coming weeks before the Bank's revised draft rules are due, the recommendation adds direct parliamentary pressure on the June publication to move further than the May CityWeek announcement implied.

What Remains Unresolved Going Into September

The framework is still being built in real time. The questions that will define competitive positioning for UK stablecoin payments firms are not yet answered: the final design of the systemic threshold and transition mechanism, the reserve requirement level after the 40% unremunerated deposit proposal comes under review, how the Transatlantic Taskforce on Markets of the Future, co-chaired by HM Treasury and US Treasury, shapes cross-border stablecoin interoperability, and where agentic payment workflows sit within the authorisation and AML frameworks being designed.

None of these will be resolved before the 6th Financial Innovation Forum. All of them will be live debates in the room.

Join the Conversation in London

Stablecoins, tokenised money, and the UK digital assets regulatory roadmap are on the agenda at the 6th Financial Innovation Forum - Payments & RegTech, 17 September 2026, Montcalm Hotel, Mayfair, London.

Senior contributors from Kraken, Agant, Visa, Mastercard, Barclays, HSBC, NatWest, the PSR, the FCA and many more will address where the framework is heading and what it means for payment firms, banks, and infrastructure providers operating in the UK market.

Request the full agenda or secure your place →

For sponsorship or registration enquiries, contact info@qubevents.com

By: Zinah Abdaki, CMO at QUBE Events

Sources: Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, made 4 February 2026 · HM Treasury Draft Amendment SI, April 2026 · Bank of England Consultation Paper — Proposed Regulatory Regime for Sterling-Denominated Systemic Stablecoins, November 2025 · Bank of England Deputy Governor Sarah Breeden, CityWeek 2026, 19 May 2026 · FCA CP26/4 and Regulatory Sandbox Update, January 2026 · House of Lords Financial Services Regulation Committee, 2 June 2026 · Freshfields — Payments Meet the Future, May 2026 · Fox Williams — UK Regulatory Regime for Fiat-Backed Stablecoins, May 2026 · FinTech Weekly — FCA Stablecoin Sandbox, March 2026