The UK Treasury has set out plans to consolidate payments regulation into a single framework spanning traditional payment services, stablecoins, and tokenized deposits, as part of a broader overhaul unveiled during Fintech Week in London.

The measures are designed to support innovation and modernize the UK’s payments regime while aligning it with changes in digital finance, including tokenization and blockchain-based settlement systems, the Treasury and City Minister Lucy Rigby said in a statement on Tuesday.

According to the statement, the framework includes plans to regulate stablecoins used in payments under a forthcoming issuance regime, while expanding the Financial Conduct Authority’s remit over Open Banking and exploring regulatory adjustments for payment activity conducted by AI agents.

The package also proposes new legislation to reduce administrative requirements for firms seeking to provide stablecoin payment services, alongside expanded regulatory powers for the FCA over Open Banking developments.

The initiative includes the appointment of Chris Woolard CBE, a partner at EY and former interim CEO of the FCA, as the Wholesale Digital Markets Champion to lead the development of tokenized wholesale financial systems, per the statement. 

Additionally, the Treasury committed £1 million ($1.35 million) in funding for the Centre for Finance, Innovation and Technology, starting in April, to support sector-wide collaboration.

National payments vision

Rigby framed the initiative as part of a broader effort to reinforce the UK’s position in financial services and payments innovation. She said fintech remains a “true British success story” and that the government is backing the sector to extend its global competitiveness and support faster growth in financial markets.

“Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change,” Rigby said in the statement.

The government said it recognizes the “transformative potential” of digital assets and blockchain technologies, describing them as capable of reshaping how consumers and businesses interact with financial services. It also noted that the UK is positioned to play a leading role in that transition, supported by its financial services base, fintech ecosystem, and regulatory approach.

In a statement to The Block, Anthony Yeung, chief commercial officer of CoinCover, said the government’s focus on stablecoins and tokenization aligns with where institutional opportunities are emerging, but stressed that regulatory design alone will not determine adoption.

“The Government’s ambitions for a payments ecosystem and its focus on stablecoins and tokenisation are directionally right, reflecting where the real opportunity lies for UK financial services institutions. But regulation, however well designed, can only take adoption so far,” Yeung said.

He added that market participation depends on operational resilience, including custody frameworks, key management systems, and disaster recovery mechanisms within regulated environments. Yeung said trust in digital assets would depend on both regulatory structure and the reliability of access and control in practical conditions.

Meanwhile, the Treasury has confirmed plans to consult soon on reforming payment services and electronic money regulation. This aligns with the "Leeds Reforms" and the government's ten-year plan to establish the UK as the “world’s centre of choice” for financial services, per the statement.