HM Treasury has released a final draft of the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026, which would modify the UK's regulatory framework for stablecoin payments. The draft, laid before Parliament on September 15, would remove certain qualifying stablecoin transactions from dealer regulation requirements.
Payment Activities Exempted
Routine transfers of UK qualifying stablecoins to another person would fall outside the dealer perimeter under the draft. Exchanging UK qualifying stablecoins for money or another UK qualifying stablecoin would similarly avoid dealer permissions.
However, the relief is narrower than a blanket exemption for all sterling stablecoins. A UK qualifying stablecoin must be issued through regulated activity by a firm holding the relevant permission. Overseas-issued tokens or coins that merely track sterling would not qualify.
Lending and Swaps Remain Regulated
The exemption does not extend to transactions that resemble financing or crypto trading. If a recipient has a right or obligation to return the stablecoin, the transfer falls outside the payment carve-out, leaving ordinary lending potentially regulated. Swapping a UK qualifying stablecoin for other types of cryptoassets, such as Bitcoin, also remains outside the payment exemption.
The draft includes a separate wholesale-style exception for certain title-transfer collateral and repo arrangements involving qualifying stablecoins, applicable when the original holder is neither a consumer nor a person in a category specified by the Financial Conduct Authority.
Custody Provisions
A new safeguarding provision would exclude temporary holding of a UK qualifying stablecoin when connected with executing a payment. However, longer-term custody arrangements, such as maintaining a customer wallet, would remain within the safeguarding activity and would not receive the payment exception.
The dealing and arranging amendments are set to begin on October 25, 2027, when the FCA's new regime for crypto firms starts. Parliament must approve the draft before it takes effect, and HM Treasury's separate payments reform must still define longer-term rules for stablecoins used in payments.
