UK Proposes Stablecoin Payments Rule, Exempts Them from Crypto Deal Licences

Context Issuers design stablecoins to maintain a 1:1 peg with a fiat currency, such as the US dollar, and users employ them for fast, low‑cost transfers. In February 2026 the UK enacted the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, which created a crypto‑asset regime that will take effect in October 2027. The new draft amends those rules to separate payment services from investment‑related crypto dealing.

Key Facts - The Treasury’s proposal exempts firms that provide stablecoin payment services from obtaining a licence under the cryptoasset dealing regime, though they may still need permission for safeguarding activities. - The carve‑out applies only to UK‑issued qualifying stablecoins; overseas‑issued tokens remain subject to crypto dealing rules. - Lending and borrowing involving UK qualifying stablecoins stay within the crypto investments regime when they involve dealing or arranging. - Market data shows the two largest stablecoins by market cap: Tether (USDT) at roughly $83 billion and USD Coin (USDC) at about $28 billion, together representing over 70 % of the $160 billion global stablecoin supply. - In the past 30 days, USDT’s 24‑hour trading volume rose 4.2 % to $68 billion, while USDC’s volume slipped 1.1 % to $22 billion, indicating steady demand for payment‑oriented tokens.

What It Means By placing stablecoins under payments law, the UK aims to reduce regulatory duplication and encourage use of these tokens for everyday transactions, while keeping investment‑type activities under the stricter crypto regime. Firms offering stablecoin wallets or merchant gateways could avoid the costly crypto‑deal licence, potentially lowering entry barriers. However, they must still comply with safeguarding rules and may face separate oversight for custody services. The exemption does not extend to lending platforms that treat stablecoins as investment assets, which will continue to need crypto‑deal permissions. Readers should watch for the Treasury’s consultation outcome after the 22 May 2026 deadline and any subsequent legislation that could bring stablecoins fully under the UK payments framework, potentially influencing how AI‑driven payment services are regulated.