The UK government has unveiled a wide-ranging package of measures during London’s Fintech Week aimed at future-proofing the country’s payments sector and keeping it at the forefront of global financial innovation.
The package centres on modernising the regulatory framework governing payment services, with the government setting out its intentions ahead of a forthcoming consultation that will invite industry feedback.
Central to the plans is the creation of a single, coherent framework covering both traditional and tokenised payments, encompassing stablecoins and tokenised deposits. Stablecoins used in payments will be brought under regulation where they have been issued under a new regulated activity for stablecoin issuance in the UK.
The government also said it would explore how payments regulation should adapt to transactions carried out by artificial intelligence agents, and bring forward legislation to ease administrative burdens for firms looking to offer stablecoin payments.
Additional elements of the package include new powers for the Financial Conduct Authority (FCA) to regulate the future of Open Banking, including support for the development of new Open Banking payments within commercial schemes.
The government also confirmed its response to a consultation on merging the Payments Systems Regulator (PSR) into the FCA, with the aim of streamlining oversight across the sector.
Chris Woolard CBE has been appointed as the government’s new Wholesale Digital Markets Champion. A partner at EY and former interim chief executive of the FCA, Woolard will lead efforts to build a tokenised wholesale financial markets system, with the goal of delivering a more efficient and competitive financial sector.
Separately, the Centre for Finance, Innovation and Technology (CFIT) will receive an additional £1m in funding from April to continue its work facilitating collaboration and addressing key challenges across the FinTech sector.
The UK’s FinTech industry benefits from a broader ecosystem that includes global banks and insurers, leading universities, a thriving start-up community, and a regulator that the government says engages with innovation early to allow firms to test, learn and scale responsibly.
Economic Secretary to the Treasury Lucy Rigby said, “Fintech 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. 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. I also welcome our new Wholesale Digital Markets Champion, Chris Woolard CBE, who will help the government drive tokenisation in our markets – a critical shift for the next ‘digital big bang’ for the UK sector.”
Wholesale Digital Markets Champion Chris Woolard CBE said, “It’s an honour to be appointed Digital Markets Champion for the UK’s 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’s success, and will ultimately enhance the UK’s global competitiveness as a leader in digital markets.”
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