UK U-turns on stablecoins in payments regulation

The UK government has reversed its stance on stablecoin regulation, now including them in the payments regulatory perimeter, announced by Economic Secretary Lucy Rigby.

The UK government has made a significant pivot in its approach to cryptocurrency regulation, specifically regarding stablecoins. Earlier today, Lucy Rigby, the Economic Secretary to the Treasury, announced that stablecoins will be included in the country's payments regulatory perimeter, a move that reverses the previous stance taken by the Labour government just 18 months ago. What Prompted the UK Government's Regulatory U-Turn? The announcement made during Rigby's address to the House of Lords Financial Services Regulation Committee marks a notable shift from a commitment made by the Labour party after coming to power in July 2024. Initially, the government had opted not to regulate stablecoins within the payment sector. This decision contradicted plans set forth by the former Conservative administration in 2022, which aimed to amend the Payment Services Regulations to include fiat-backed stablecoins used in UK payment systems. How Did We Get Here? The inquiry into stablecoin regulations was launched by the House of Lords back in January 2026, signaling a growing interest in the potential impacts and benefits of stablecoins within the financial ecosystem. Rigby emphasized that the inclusion of stablecoins in the regulatory framework would create a more diversified payments landscape, benefiting both consumers and businesses. This latest stance is a reversal from comments made by former Economic Secretary Tulip Siddiq, who stated at the Tokenisation Summit in November 2024 that stablecoins wouldn't come under payments regulation "at this time." Siddiq was concerned that such regulation would impose unnecessary burdens on stablecoin activities, which she deemed disproportionate to the current use cases. What Are the Expected Benefits of This Regulation? During Rigby’s testimony, she pointed out that the decision to regulate stablecoins stems from the potential advantages that a diversified payment system could offer. The idea is that a robust payments framework would