The British exclusion for payments with stablecoins comes to consultation

HM Treasury published a draft on 21 April 2026 to create a British exclusion for stablecoin payments within the new crypto regime. The proposal sought to prevent certain payment services with qualifying stablecoins issued in the United Kingdom from also needing dealing or arranging permits. The document did not change the law when it was published.

How the British exclusion would work for stablecoin payments

The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 had created regulated activities to issue, custody and trade certain cryptoassets. The Treasury detected that a company that used a British stablecoin to pay could also be involved in dealing or arranging, even if its main function was to transmit value.

The draft proposed removing certain payments with UK qualifying stablecoins from those trading activities. The purpose was to reduce duplication while preparing a broader reform of payment services. The issuance would continue under authorization from the Financial Conduct Authority (FCA).

The exclusion would not apply to loans and indebtedness with stablecoins in the same way. The Government considered that these activities posed different consumer risks and should remain within the scope of dealing. It also did not automatically resolve all cross-border payments with tokens issued outside the UK.

That last frontier was relevant for global suppliers. The draft focused on qualified stablecoins issued in the United Kingdom, so an identical payment with a foreign token could receive another treatment. The broadcast structure and location of the service still mattered.

Custody and promotion remained relevant

A firm holding tokens on behalf of a client could need safeguarding permission even if the payment transfer was outside of dealing. The draft also specified that a temporary exclusion from custody for settlement was intended to close operations, not to custody stablecoins during a payment service.

The Treasury also proposed financial promotion adjustments to maintain consistency with the new perimeter. An exclusion did not allow any token to be described as stable or hide fees or risks. The issuer and structure had to meet the definition of qualifying stablecoin.

Companies subject to anti-money laundering could retain registration obligations even without a dealing permit. Identification, monitoring and sanctions depend on functions and risks, not only the regulatory label chosen for the operation.

Avoid overlaps without creating a void

The problem was sequential. The crypto regime was to begin before the modernization of the payment law was completed. Applying two full authorizations to the same function could hold back providers; eliminating all supervision until the reform could leave users unprotected.

The proposed solution maintained issuance and safeguarding within the crypto framework while easing dealing and arranging for specific payments. Later, custody linked to payment could be moved to the payment regime. That design required a coordinated transition with the FCA.

For a company, it was necessary to decompose the flow: who issues, who receives money, who holds tokens, and who initiates the transfer. Only then could it be determined which exclusion was applicable. A product that added credit or investment could leave the assumption.

Outlook from 2026

The Treasury received comments until May 22, 2026. At the beginning of August, the April publication had to be cited due to its draft nature: the legal effect depended on the final instrument and its entry into force, not the policy note.

The proposal anticipated a clear direction: separating the use of a stablecoin to pay from its issuance, custody or loan. For users and firms, the question is not whether the token “serves for payments,” but rather what activity each participant performs and what permission covers it.