HM Treasury Consultation on UK Payments Framework Closes Soon, Potentially Impacting Stablecoins and Agentic Commerce

Firms have six days left to submit their responses to the consultation, which aims to prepare the UK for the emerging “multi-money” ecosystem.

By Brett Carr, Stuart Davis, Christian F. McDermott, Fiona Garrahan, Cameron Jones, and Callum Lee

On 14 July 2026, HM Treasury (HMT) launched its consultation on Modernising Payment Services Regulation, welcoming views on how the UK government should amend the regulatory framework for payment services (Payment Services Regulations 2017 or PSRs) and e-money (Electronic Money Regulations 2011 or EMRs) in the UK to support the Chancellor’s Mansion House 2025 commitment to modernise and future-proof the UK’s payments framework. The consultation ranges widely, covering the future regulatory treatment of stablecoins and tokenised deposits, the UK’s ambitions for agentic AI payments, the next phase of Open Banking, and the boundary between requirements set in legislation and those delegated to the FCA.

The consultation closes on 6 October 2026. As the deadline approaches, we set out below a reminder of the key proposals and areas where HMT is seeking industry feedback.

Following the consultation, the current plan is for HMT to prepare the necessary Statutory Instrument (SI) during 2027–28 and the FCA to undertake consultations and develop the detailed regulatory framework in parallel.

Aims of the Consultation

The government’s stated aim is threefold: a clear, predictable, and proportionate regulatory framework for payment services; regulation that supports competition and innovation; and robust consumer protection.

With these aims, the government is seeking to future-proof the UK legislative framework for what it describes as an emerging “multi-money” ecosystem — involving new forms of tokenised payments, account-to-account payments for goods and services, and agentic payments where AI acts on behalf of consumers and businesses.

Proposed Changes

1. Delegation to the FCA to support a more “agile and outcomes-focused regime”. Core provisions, such as the perimeter for regulated payment activities, will remain in primary legislation. However, the government is weighing whether detailed, technical requirements should shift from statute into FCA rules, similar to the earlier transition of the safeguarding regime. The Strong Customer Authentication regime is already earmarked for revocation from the PSRs in favour of outcomes-based FCA rules (albeit few details on the plan or the available exemptions have been confirmed). Respondents are asked which firm-facing requirements should remain in legislation or move to the FCA, and whether any of the retained provisions relating to the regulatory framework for payment services and electronic money require updates. Firms may therefore have a valuable opportunity to address known pain points in the current PSRs and EMRs.
2. Reshaping the list of regulated payment activities. Like proposals under the EU revised payment services regime (PSD3), the government has proposed a streamlined set of regulated payment and e-money activities, which merges some existing categories (such as cash placement or withdrawal from payment accounts) and splits others (such as issuing payment instruments and acquiring payment transactions). Importantly, each of these activities will cover both non-tokenised fiat and tokenised payments within a single set of regulated payment activities. However, existing authorised firms will be required to undergo a variation of permission before providing tokenised payment services. Respondents are asked if they agree with this approach, or if there are any risks of combining activities in this way.
3. Reviewing the regulation of tokenised deposits. Under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, tokenised deposits already fall within the established legal definition of a deposit under financial services law and are regulated accordingly, on a “same risk, same regulatory outcome” basis. The consultation now asks the narrower question of whether the payment services framework itself presents any barriers to unlocking the opportunities of tokenised deposits in retail payments.
4. Moving some stablecoins into the payments perimeter. The government intends to bring certain stablecoins out of the cryptoasset framework and into the payment services framework — a step that necessitates a careful assessment of how this regime will interact with a nascent regulatory regime for cryptoassets.
   • Qualifying stablecoins. Building on the new article 9M of the RAO¹ regulated activity for issuing a “qualifying stablecoin” (a sub-category of qualifying cryptoasset that must be backed by assets maintaining a stable value against a fiat currency), the consultation proposes treating UK-issued qualifying stablecoins as “money-like” for payments purposes, on the basis that robust standards will already have been secured under the new FSMA regime. This treatment could in future extend to certain overseas-issued stablecoins where HM Treasury formally recognises the issuing jurisdiction’s regulatory framework as achieving similar outcomes. Absent such recognition, overseas-issued stablecoins would be regulated as ordinary cryptoassets under the FSMA cryptoassets regime rather than the payments regime. The consultation asks whether this approach to UK and recognised overseas jurisdiction stablecoins is the right one to take.
   • Permissions. The government is considering whether firms authorised as UK issuers of qualifying stablecoin should be able to provide related stablecoin payment services without needing additional permissions (subject to conditions), mirroring the position for credit institutions today. Separately, under the wider proposals for tokenised payments, new regulated payment activities would be capable of covering both fiat and tokenised payments, but firms may still need to apply to the FCA for a variation of permission before actually providing tokenised payment services, reflecting their different risk profile.
   • Safeguarding. The government proposes that safeguarding activities related to the provision of stablecoin payment services should be regulated under the payments regime rather than the separate cryptoasset safeguarding regime, to avoid firms needing dual authorisations. Notably, the latest HMT SI from 16 September 2026 removes the temporary holding of UK qualifying stablecoins from the scope of the cryptoasset safeguarding activity under the new FSMA regime, where those stablecoins are being held temporarily in connection with a payment transaction. These changes are aimed at avoiding duplicative or disproportionate regulatory requirements during the period before the wider payment reforms take effect.
   • Other open questions. More broadly, the government asks whether combining tokenised and non-tokenised payments into a single set of regulated activities creates risks, whether the framework requires adaptation to support smart contracts and programmable payments underpinning them, and whether existing conduct and prudential requirements remain suitable for tokenised payments.
5. Trailblazing the market for agentic payments. The government is creating an AI-ready economy and wants the UK to lead globally on the development of agentic payments. Respondents are asked how the existing regime needs to adapt to support agentic payments, including whether existing authentication and liability for unauthorised payment transactions rules (which preceded the AI movement) need updating to accommodate this.
6. The future regulatory framework for Open Banking. Two parallel tracks are proposed: modernising the PSRs’ foundational “Rights of Access” (including a new right of access for variable recurring payments), and using the Data (Use and Access) Act 2025 (DUAA) to hand the FCA broad rule-making powers over ecosystem participants (ASPSPs, PISPs, AISPs) and so-called “interface bodies” under the DUAA, including the incoming “Future Entity” and commercial Open Banking “schemes”. The consultation asks pointed questions on the scope of the new right of access for variable recurring payments (VRPs) and whether, and in what circumstances, ASPSPs should be able to charge third-party firms for access currently provided free of charge. On the FCA’s role, it asks whether the FCA should be able to intervene directly in Open Banking access pricing, mandate participation in commercial schemes, and hold monitoring and enforcement powers over Open Banking more generally.
   The proposal is a shift from a mandated, largely free access model underpinned by the PSRs and the CMA’s Retail Banking Market Investigation Order 2017 towards an industry-led, commercially priced ecosystem sitting on statutory foundations. Third-party providers whose business models depend on free application programming interface (API) access may want to engage: HMT emphasised its commitment to protecting those models, but it is equally alive to concerns about large firms consuming free APIs at scale, and intends to enable the FCA to determine whether access currently required to be provided free of charge should in future transition to a commercial basis. HMT is separately considering whether the existing prohibition in the PSRs on ASPSPs requiring a PISP or AISP to enter into a contract before granting access remains appropriate, suggesting by way of example that a contract requiring a fee once API call volumes pass a high threshold may be reasonable. Access under the proposed new VRP right of access would not be required to be provided free of charge, except in relation to “sweeping”, and HMT proposes to maintain the existing requirement on relevant ASPSPs to enable sweeping through VRP functionality free of charge. For ASPSPs, the trade-off is the prospect of a return on Open Banking investment in exchange for a new right of access for variable recurring payments and closer FCA oversight.
7. Interaction with the EU’s PSD3 reforms. An open question remains around alignment with the EU, which is currently pursuing its own payments reform via PSD3, expected to take effect in late 2027 / early 2028. The consultation is non-committal about how closely the government intends to follow PSD3, if at all. Respondents are instead asked a broad question around which international regulatory developments the UK should incorporate into its updated payments and e-money framework.

Following the consultation, the government will detail its planned reforms, with any changes to the legislative framework to be made via secondary legislation.

Next Steps for Firms

We welcome the government’s aim to deliver a more agile and responsive regulatory framework. With 42 questions posed to industry and many of the suggestions still in flux, this consultation reads less like a set of proposals and more like an open invitation to help write the answer. That said, firms are well placed to influence how the eventual rules take shape. The window closes imminently on 6 October 2026.