UK Government Proposes Stablecoin Payment Services Regulation

The UK government's plans to modernize its payment services regulation have taken a significant step forward with the announcement of proposed changes to the Cryptoasset Regulations 2026.

The draft statutory instrument aims to ensure that firms providing stablecoin payment services do not need to seek a license for cryptoasset dealing or arranging activities. This carve-out only applies to dealing in cryptoassets and arranging deals, and safeguarding undertaken in the course of providing payments services will fall within the payments regime rather than the crypto regime.

The changes also clarify that lending and borrowing activities involving UK-issued qualifying stablecoins will remain in the scope of the crypto investments regime. However, overseas-issued stablecoins will continue to be subject to crypto dealing and arranging regulations for now.