Source: HM Treasury<\/p>\n
The UK\u2019s payments sector is to be equipped for the future of rapid financial innovation through a new package announced during Fintech Week in London.<\/p>\n
The measures will help the UK remain at the cutting edge by promoting innovation and trust within the payments sector to drive growth. This means delivering a more agile and streamlined regulatory framework and ensuring regulation can keep pace with rapid technological change whilst maintaining strong consumer protections.<\/p>\n
City Minister Lucy Rigby continues to amplify the government\u2019s efforts in maintaining the UK as the leading destination for fintechs to start, scale and succeed.<\/p>\n
The government has set out further detail on how it intends to modernise payment services regulation to support innovation in money and payments, ahead of a forthcoming consultation with the sector.<\/p>\n
At the core is a move to integrate payment services and electronic money into the UK\u2019s broader financial services framework, creating a single, coherent approach across traditional and tokenised payments.<\/p>\n
Key measures include:<\/p>\n
Integrating payment services and electronic money into the UK\u2019s core regulatory framework, covering traditional payments, tokenised payments, stablecoins and tokenised deposits
\nRegulating stablecoins used in payments where issued under the UK\u2019s forthcoming regulated activity for stablecoin issuance
\nExploring how regulation should adapt to payments conducted by AI agents
\nGranting the Financial Conduct Authority (FCA) new powers to oversee the future of Open Banking, including enabling new payment solutions within commercial schemes
\nIntroducing legislation to reduce administrative burdens for firms providing stablecoin payment services, while maintaining safeguards<\/p>\n
Alongside this:<\/p>\n
Chris Woolard CBE has been appointed as wholesale digital markets champion to lead work on a tokenised wholesale financial markets system
\nAn additional \u00a31 million will be provided to the Centre for Finance, Innovation and Technology (CFIT) from April to support collaboration and address key fintech challenges<\/p>\n
The government has also responded to its consultation on bringing the Payments Systems Regulator into the FCA , as part of efforts to streamline regulation and reduce complexity.<\/p>\n
Economic secretary to the Treasury, Lucy Rigby, said: \u201cFintech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth.<\/p>\n
\u201cThis 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.<\/p>\n
\u201cI also welcome our new wholesale digital markets champion, Chris Woolard CBE, who will help the government drive tokenisation in our markets \u2013 a critical shift for the next \u201cdigital big bang\u201d for the UK sector.\u201d<\/p>\n
Chris Woolard CBE, wholesale digital markets champion, said: \u201cIt\u2019s an honour to be appointed digital markets champion for the UK\u2019s Wholesale Financial Markets Digital Strategy. As financial markets increasingly move away from manual processes to digital, tokenised systems, collaboration and an open two-way dialogue between the private and public sectors will best support the Strategy\u2019s success, and will ultimately enhance the UK\u2019s global competitiveness as a leader in digital markets.<\/p>\n
\u201cUK fintech benefits from Britain\u2019s world leading financial services sector offering a thriving start-up ecosystem, global banks and insurers, leading universities, and a regulator that engages with innovation early so firms can test, learn and scale responsibly.\u201d<\/p>\n
Over 3,000 fintech firms support tens of thousands of skilled jobs across the country, attracting over \u00a32.6 billion in investment last year that is second only to the United States.<\/p>\n
The government recognises the transformative potential of digital assets and blockchain technologies. These developments have the potential to fundamentally reshape how consumers and businesses interact with financial services, and the UK is well placed to be at the forefront of that transformation.<\/p>\n
A consultation is set to be introduced on reforms to the regulation of payment services and electronic money, ensuring the framework is ready to support tokenised payments such as stablecoins, unlock the full potential of Open Banking, and explore how to enable the safe adoption of AI agents to conduct payments on behalf of consumers and businesses.<\/p>\n
Through the Financial Services Growth and Competitiveness Strategy, known as the Leeds Reforms, announced last summer as part of the Chancellor\u2019s Mansion House speech, the government set out its ten-year plan for the UK to be the world\u2019s centre of choice for financial services investment over the next ten years. These reforms included measures to streamline the regulatory environment and make the UK the best place for fintechs to start, scale, list, and stay.<\/p>\n
Stakeholder quotes<\/p>\n
Janine Hirt, chief executive officer, Innovate Finance said: \u201cThe UK has all the ingredients to be a global superpower in fintech, payments and capital markets by leading in Open Banking, digital assets and stablecoin, and agentic AI.<\/p>\n
\u201cUnleashing innovators and championing transformation in markets is critical. We look forward to mobilising industry to work with Chris Woolard, Government and regulators to drive this strategic ambition and deliver at pace.\u201d<\/p>\n
Philip Belamant, co-founder and chief executive officer, Zilch said: \u201cAI will fundamentally change how people interact with money, shifting payments from something consumers actively manage to something that is intelligently managed and optimised in the background. As this becomes a reality, it\u2019s critical that regulation evolves to support innovation while maintaining strong consumer protections.<\/p>\n
\u201cWe welcome the government\u2019s focus on adapting payment regulation for AI-driven transactions. The UK has a real opportunity to lead globally in enabling agentic finance, helping consumers benefit from smarter, more efficient ways to manage their money.\u201d<\/p>\n