HM Treasury on July 14, 2026, published a long-awaited consultation, Modernising Payment Services and Electronic Money Regulation, that would rewrite the rules for UK payments. The government proposes stripping the technical detail out of the Payment Services Regulations 2017 and the Electronic Money Regulations 2011 and moving it into the rulebook of the FCA, the Financial Conduct Authority. A single regime would cover fiat money, tokenized deposits, and UK stablecoins. The consultation also lays the legal groundwork for agentic payments, made by AI agents, and for a permanent open banking framework. It runs for 12 weeks and closes on October 6, 2026.
It is the most ambitious UK payments reform since the country transposed PSD2. It would reset the rules for banks, payment institutions, e-money institutions, fintechs, and now stablecoin issuers. While Brussels finalizes PSD3 and the Payment Services Regulation (PSR), London is setting its own course.
Rules written for a pre-wallet market
The current rules date from another era. The EMRs go back to 2011 and the PSRs to 2017, and they transpose an EU directive, PSD2, drafted before the rise of super apps, wallets, and tokenization. The sector has since grown sharply in size and complexity, and the government’s latest National Risk Assessment identifies an increased risk of financial crime linked to that growth. After Brexit, the UK also wants a framework built for its own ambitions rather than one inherited from EU law.
The consultation follows the National Payments Vision, the roadmap HM Treasury published in November 2024 in response to the Future of Payments Review (the 2023 Garner report). That vision already made the FCA the regulator for open banking and set the goal of making account-to-account payments “ubiquitous.” The July 2026 consultation is its legislative follow-through.
Detailed rules move to the FCA
The core of the reform is a change of method. Today, most obligations sit in legislation, which is rigid and slow to amend. Under the proposal, legislation would keep the scope of regulated activity, key definitions, and consumer protections, while technical and operational requirements would move into the FCA’s rules, which are easier to update. The clearest sign of the shift is the revocation, already committed to by the government, of the prescriptive strong customer authentication (SCA) rules in the PSRs, so the FCA can replace them with “outcomes-based” standards instead of a checklist.
| Stays in legislation (statute) | Moves to FCA rules |
|---|---|
| Scope of regulation and definitions | Technical and operational requirements |
| Consumer protections | Authentication rules (SCA) |
| Statutory rights (deadlines, notices) | Detailed reporting obligations |
| Framework for regulated activities | Product and process standards |
One regime for fiat, tokenized deposits, and stablecoins
The most far-reaching change: the government proposes folding today’s payment activities into a single regulated activity covering fiat money, tokenized deposits, and UK-issued qualifying stablecoins, which would be treated as “money-like” instruments within the scope of payments regulation. Safeguarding of those UK-issued stablecoins would eventually fall under the payments regime rather than a separate crypto authorization. Other overseas stablecoins, from jurisdictions the UK has not “recognised,” would stay under the cryptoasset regime due in October 2027.
The timing matters. A consortium of more than 140 companies, including Visa and Mastercard , is backing the Open USD dollar stablecoin, and the big networks are building their own on-chain settlement platforms. By clarifying how domestic stablecoins fit into payment rails, London is trying to keep the pound from falling behind the tokenized dollar.
Open banking gets a permanent legal footing
The proposal would also move open banking off its makeshift base, a mix of the PSRs and an order from the Competition and Markets Authority (CMA). In its place: a statutory framework, an access right for variable recurring payments (VRPs), a central standards body to replace the current implementation arrangements, and FCA powers under the Data (Use and Access) Act 2025. The government is even considering regulated access fees, with fairness guardrails, to fund the ecosystem without stifling competition. The UK Payments Initiative, launched on June 2, 2026, by banks and fintechs, is already laying the commercial groundwork.
Banks, fintechs, stablecoin issuers, and AI firms all face changes
- Banks and EMIs: prepare for obligations to move from legislation to FCA rules, with standards that change more often but can be updated faster.
- Fintechs and wallets: a single entry point for fiat and tokenized services, though firms will need a variation of permission to handle stablecoins.
- Stablecoin issuers: clear status inside the payment rails, provided the coin is issued and recognized in the UK.
- Open banking firms: a move from a transitional regime to a statutory framework, with commercial VRPs and potentially regulated pricing.
- AI agent providers: for the first time, a major government is consulting on consent and liability rules for agentic payments.