The UK government has announced a package of measures to modernise payments regulation and support tokenised assets, AI-driven payments, and Open Banking.
The UK government has set out a series of measures aimed at updating the regulatory framework governing payment services, with a focus on accommodating tokenised assets, stablecoin payments, Open Banking, and AI-driven transactions.
The package, put forward by HM Treasury, signals an intent to consolidate and streamline existing payments regulation rather than layer new rules on top of legacy frameworks. Central to the proposals is the integration of payment services and electronic money regulation into the UK's broader financial services regulatory structure, creating a single framework covering both traditional and tokenised payment instruments.
Regulatory reform and digital assets
Among the measures outlined, the government intends to regulate stablecoins for use in payments, specifically those issued under a forthcoming regulated activity for stablecoin issuance in the UK. Legislation is also planned to reduce administrative requirements for firms seeking to offer stablecoin-based payment services. In parallel, the government stated it will explore how payment services regulation should adapt to transactions conducted by AI agents on behalf of consumers and businesses.
The Financial Conduct Authority (FCA) is to receive new powers to oversee the next phase of Open Banking development, including the creation of new Open Banking payment products within commercial schemes. The government also confirmed it will proceed with bringing the Payments Systems Regulator (PSR) into the FCA, following a consultation on the matter, with the stated aim of reducing regulatory duplication.
Funding and broader context
The Centre for Finance, Innovation and Technology (CFIT) will receive an additional EUR 1 million in funding from April 2026 to continue its work supporting collaboration across the fintech sector.
The measures build on the Financial Services Growth and Competitiveness Strategy, referred to as the Leeds Reforms, which was announced in the summer of 2025 as part of the Chancellor's Mansion House speech. That strategy set out a ten-year plan to position the UK as a destination for financial services investment.
The UK fintech sector currently comprises over 3.000 firms and attracted more than EUR 2.6 billion in investment in 2025, a figure the government states is second only to the US. A formal consultation on reforming payment services and electronic money regulation is described as forthcoming, and will invite feedback from the payments sector.
The regulatory direction reflects a broader effort to ensure the UK's frameworks can accommodate structural shifts in how payments are initiated, processed, and governed, particularly as blockchain-based settlement and automated financial agents move from experimentation toward commercial deployment.
