Today, HM Undersecretariat of Treasury has implemented new measures to improve the payments sector and increase the competitiveness of the ecosystem. The policy includes items such as stablecoins, tokenized deposits and more.
HM Treasury emphasizes that more than 3,000 Fintech companies operate in the UK and the sector attracted over £2.6 billion in investment last year.
The UK has long been a major global financial centre, and if policymakers do not support Fintech the UK will be left behind.
Treasury Economy Secretary, Lucy RigbyCommenting on the announcement, he stated that Fintech is a British success story and that they support innovation in financial services so that the UK can maintain its competitive advantage.
“Today’s package is our latest stake in the field as we build a payment ecosystem that is secure, competitive and fully equipped to capitalize on the opportunities created by rapid technological change.”
Chris Woolard, The new Wholesale Digital Markets Champion, who previously served as innovation lead at the FCA, said tokenized assets are replacing manual methods and that both private and public organizations need to work together to ensure success.
“UK Fintech benefits from Britain’s world-leading financial services sector, which offers a thriving start-up ecosystem, global banks and insurers, leading universities and a regulator that engages innovation early so firms can test, learn and scale responsibly.”
The government recognizes that digital assets and blockchain technology will transform financial services and that a framework must be in place to support their development.
The objectives of the policy include:
- Improving the regulation of payment services and electronic money by integrating them into the UK’s core regulatory approach to financial services. This will mean creating a single, consistent framework for both traditional and tokenized payments, including stablecoins and tokenized deposits.
- Regulating stablecoins for their use in payments; these stablecoins will be issued under the upcoming new regulated activity for the issuance of stablecoins in the UK.
- Exploring how regulations on payment services should be adapted to payments carried out by artificial intelligence agents.
- Providing the FCA with new powers to regulate the future of Open Banking, including supporting the development of new Open Banking payments under commercial plans.
Nigel Brook-WaltersRevenue Manager at PAYMENT OF MONEYS said the announcement shows that the government understands the structural change taking place today and the need to be in a leadership position.
“The move to establish a consistent regulatory framework for both traditional and tokenized payments and the appointment of the Wholesale Digital Markets Champion sends exactly the right signal to international markets,” Brook-Walter said. “While regulation creates the conditions for growth, infrastructure and education also enable it. What must be remembered is the need for industry collaboration to translate regulatory progress into practical capability for merchants and businesses that will free them from the failures of legacy payment systems and enable them to thrive in the digital asset economy.”
A consultation on updates to the payments ecosystem is expected soon.
