What to know:
- UK regulators want tokenized payments linked with future retail payment infrastructure.
- FCA crypto licensing will cover stablecoin issuers, custodians, and trading firms.
- Bank of England plans longer settlement hours to support tokenized finance growth.
UK regulators have placed tokenized payments inside the country’s updated retail payments roadmap. The update calls for infrastructure that can support tokenization and new digital money. It also seeks stronger links between emerging payment models and traditional systems.
In a Thursday update, HM Treasury on behalf of the Payments Vision Delivery Committee said the document builds on the National Payments Vision released in November. It explains the possibilities for future payment systems to enable a multi-money ecosystem.
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Tokenized Payments Move Into UK Retail Payment Infrastructure
Programmable payments could drive innovation in the UK market, according to the update. It also states that some of these products may be based on tokenization. This provides a greater sense of clarity for tokenized payments in the country’s retail payments strategy.
Regulators stated that future infrastructure should enable new forms of digital money to interoperate with current payment systems.
This encompasses systems connected with stablecoins as well as tokenized deposits. The aim is to avoid separate and disconnected payment networks.
The announcement follows the UK’s efforts in preparing a broader rulebook for cryptocurrencies. The FCA recently published its crypto regulatory framework.
The regulations will apply to trading platforms, custodians, stablecoin issuers, staking companies, and other crypto intermediaries.
In September, the FCA is expected to open the window for crypto companies to get licensed. It will remain open until February 28, 2027. The new regime is scheduled to start on October 25, 2027.
UK Payments Rulebook Review Supports Tokenized Payments
In April, the UK government announced that it will look at its payments rulebook. That review will include the payment services and electronic money rules. The aim is to make “one framework for traditional and tokenized payments,” said officials.
HM Treasury said the review would support new payment technologies. These include stablecoins, tokenization, and tokenized deposits. The announcement was made in April along with the Economic Secretary to the Treasury Lucy Rigby.
The Bank of England has also planned for tokenized finance. In May, it recommended extended hours for its basic settlement infrastructure. The central bank noted that greater access can help promote cross-border payments and new settlement models.
UK Tokenized Payments Plan Moves to Public Feedback
The Bank of England is asking the public to comment on that proposal until July 3. It plans to publish a feedback statement in the summer. The proposal is part of broader efforts with FCA to modernize wholesale markets.
The FCA also noted that tokenization and distributed ledger technology have the potential to enhance fund management. It also said these tools can help improve efficiency and innovation in UK asset management. That perspective brings another regulatory signal to tokenized payments.
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