HM Treasury Proposes Amendments to UK Cryptoasset Stablecoin Regime in April 2026

HM Treasury published a draft statutory instrument and accompanying policy note on 21 April 2026 proposing amendments to the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026. The draft SI is at the pre-legislative consultation stage; Treasury is accepting written feedback until close of business on 22 May 2026. The underlying parent instrument, SI 2026/102, was made in February 2026 and is expected to come into force on 25 October 2027.

The primary amendment removes UK-issued qualifying stablecoins (UKQS) from the regulated activities of dealing in qualifying cryptoassets as principal, dealing in qualifying cryptoassets as agent, and arranging deals in qualifying cryptoassets, as defined in regulations 9I, 9J, and 9K of SI 2026/102 respectively. The carve-out is transitional: UKQS lending and borrowing remains within the dealing perimeter to preserve the FCA's ability to address associated consumer risks. A separate clarification restricts the existing temporary settlement exclusion under the safeguarding activity (regulation 9N) so that it applies only where the activity is ancillary to a dealing or arranging transaction and not where a firm holds UKQS in the course of providing payment services.

The primary practical consequence is that firms providing stablecoin payment services using UKQS will no longer need to seek FCA authorisation for the dealing and arranging activities by the September 2026 application opening date — avoiding a regulatory burden while the government completes its broader payments services reform process. However, such firms continue to require safeguarding authorisation under regulation 9N where they hold cryptoassets on behalf of clients. The draft SI also addresses two further matters: an exemption for proprietary trading and market-making activities (to avoid competitiveness disadvantages for UK-based firms) and an extension of the existing Central Securities Depository exemption under Article 40 of the Regulated Activities Order 2001 to specified investment cryptoassets.

The government separately notes that it will consult on payments services reform in Q2 2026, at which point stablecoin payment services are expected to migrate from the crypto regime into a new regulated payments perimeter. Until that transition is completed, the FCA will work to streamline the path for UKQS payment firms. The draft SI also turns on early the provisions that remove UKQS backing assets from classification as collective investment schemes or alternative investment funds, removing a barrier to broader stablecoin use cases before the full regime commences.

Prokopiev Law Group advises on stablecoin regulatory structuring, FSMA cryptoasset perimeter analysis, and FCA authorisation strategy in the UK; our partner network provides specialised counsel on digital payments and cryptoasset law. We are available to advise UKQS issuers, payment service providers, exchanges, and custodians on navigating the evolving UK cryptoasset and payments regulatory environment. Our work includes: stablecoin legal frameworks, FSMA regulated-activities analysis, cryptoasset safeguarding compliance, UK payments regulation, FCA authorisation, qualifying cryptoasset classification, digital asset structuring.

Source: HM Treasury, "Policy note: Draft statutory instrument amending the Cryptoasset Regulations" (published 21 April 2026), https://www.gov.uk/government/publications/policy-note-draft-statutory-instrument-amending-the-cryptoasset-regulations. Confirmed 28 April 2026.

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