Treasury lays final stablecoin exemptions ahead of 2027 regime

HM Treasury has laid the final text of amendments that would let banks, payment firms and other intermediaries move a "UK qualifying stablecoin" — transfer it, exchange it, post it under a qualifying title-transfer or repurchase collateral arrangement, or hold it briefly while a payment settles — without that activity alone triggering authorisation as regulated dealing, arranging or safeguarding. The draft was laid before both Houses of Parliament on 15 September 2026 under the affirmative procedure. As of 26 September 2026, MPs and peers had not approved it, and the instrument is not yet law.

The changes matter to UK stablecoin issuers, payment service providers, cryptoasset intermediaries and firms that hold digital assets as collateral. They sit alongside the broader UK cryptoasset regime built on the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (S.I. 2026/102), which comes fully into force on 25 October 2027. The Financial Conduct Authority's (FCA) authorisation gateway for firms wanting to carry on cryptoasset activities is scheduled to open on 30 September 2026, ahead of that commencement date.

The practical effect, if Parliament approves the instrument as drafted, is targeted relief rather than deregulation. Ordinary transfers and exchanges of UK qualifying stablecoins, defined collateral structures and short holdings during payment execution would sit outside specified regulated activities. Issuing a stablecoin, transferring or disposing of one under an arrangement that carries a right of return — the structure used to lend or borrow the token itself — exchanging it for a different cryptoasset, and longer-term custody would remain inside the regulatory perimeter, alongside FCA issuance rules and anti-money-laundering obligations.

Where the process stands

The base regime — S.I. 2026/102 — was made in February 2026 and set out the regulated activities, including issuing a qualifying stablecoin and cryptoasset safeguarding. HM Treasury published a policy note and initial draft amendments on 21 April 2026, inviting feedback by 22 May 2026. The FCA then published its final cryptoasset-regime policy statements and instruments, including the Cryptoassets (Stablecoins) Instrument 2026 (FCA 2026/36), on 30 June 2026.

The amending instrument laid on 15 September 2026 is the product of that process. It remains a draft statutory instrument subject to the draft affirmative procedure, meaning it needs a resolution approving it in both the House of Commons and the House of Lords before it can be made. Parliament's tracker recorded it as awaiting that approval as at 26 September 2026.

Most of the instrument's general provisions would commence the day after it is made, once approved. Its changes to the Regulated Activities Order and the Financial Promotion Order — which carry the substance of the stablecoin exemptions — would not take effect until 25 October 2027, alongside the wider regime. Separately, amendments to the collective investment scheme, alternative investment fund and e-money boundary in regulations 43, 46 and 47 of S.I. 2026/102 are timed to commence 21 days after the amending instrument itself comes into force, a date that cannot be fixed until Parliament approves it.

What counts as a UK qualifying stablecoin

The exemptions apply only to a defined category of token. A UK qualifying stablecoin is a qualifying stablecoin issued within article 9M of the base regulations by a person holding the relevant Part 4A permission under the Financial Services and Markets Act 2000. That authorisation requirement does not go away: issuing a qualifying stablecoin remains a regulated activity, and the FCA's authorisation gateway is due to open on 30 September 2026, well before the regime's 25 October 2027 commencement.

This distinction matters for readers assessing any product marketed as a stablecoin. A token that is not issued by an FCA Part 4A permission holder under article 9M does not qualify as a UK qualifying stablecoin, and so falls outside the transfer, exchange and temporary-payment exclusions described below. The collateral exclusion is wider in this respect: as explained below, it extends to qualifying stablecoins generally, not only UK qualifying stablecoins.

Transfers and exchanges: the core exclusion

The instrument would exclude a transfer of a UK qualifying stablecoin, or its exchange for money, another asset or another UK qualifying stablecoin, from the regulated activities of dealing as principal, dealing as agent and arranging deals. In practice, that means a payments firm moving these tokens between customers, or converting them to sterling, would not need to hold dealing or arranging permission for that transaction alone.

Two carve-outs keep the exclusion narrow. First, it would not cover a transfer or disposal that carries a right of return — the structure typically used for lending or borrowing a stablecoin. Second, it would not cover an exchange of a UK qualifying stablecoin for a qualifying cryptoasset that is not itself a UK qualifying stablecoin, so converting into Bitcoin or another cryptoasset falls outside the relief and may still need the relevant permission.

Collateral: title-transfer and repurchase structures

A separate exclusion covers qualifying stablecoins transferred under title-transfer cryptoasset collateral arrangements, and qualifying stablecoins acquired under repurchase agreements. A title-transfer arrangement, as defined in the instrument, requires the collateral provider to transfer legal and beneficial ownership of the token to secure or guarantee financial obligations, with an equivalent asset returned once those obligations are discharged.

This collateral exclusion is broader than the transfer-and-exchange exclusion in one respect — it is not limited to UK qualifying stablecoins — but narrower in another: it would not apply where the original collateral provider is a consumer, or belongs to a class of person the FCA specifies in its rules. HM Treasury's April policy note had flagged collateral treatment as unresolved; the September text supplies the defined structures above, which is a material change from the earlier draft.

Payments: temporary holding, not custody

The instrument would create a distinct exclusion for a UK qualifying stablecoin held temporarily in connection with executing a payment transaction — defined as placing, transferring or withdrawing funds, including UK qualifying stablecoin, initiated by or on behalf of a payer or payee. This holding would sit outside article 9N cryptoasset safeguarding.

This is a reversal from the position set out in HM Treasury's April note, which had proposed narrowing the existing temporary-settlement exclusion so it would not cover stablecoins held during payment services at all. The final draft instead adds a bespoke exclusion for that exact activity.

Two limits apply. There is no numerical maximum duration specified for what counts as "temporary" — the boundary between a momentary execution holding and operating a customer wallet is not fixed in the text, and would depend on operational control and contractual terms in a given case. And a separate, more general temporary-settlement exclusion remains confined to holdings ancillary to dealing, arranging, operating a qualifying cryptoasset trading platform or qualifying cryptoasset staking — it is not the same provision as the new payment-transaction exclusion. Custody that falls outside both exclusions can still require cryptoasset safeguarding permission and compliance with the FCA's CASS 17 safeguarding rules, depending on the service performed.

What changes for issuers

An authorised issuer's arrangements for the assets it holds to maintain its UK qualifying stablecoin's value would be excluded from cryptoasset safeguarding and from safeguarding-and-administering-investments activity. That is perimeter relief for how backing assets are held, not a removal of the FCA's substantive issuance rules. Backing-asset composition, statutory trust arrangements, redemption rights and disclosure requirements continue to apply to authorised issuers; the FCA's final policy permits an excess of up to 5% in the backing-asset pool, effective 25 October 2027.

Financial promotions and financial crime

The financial-promotion restriction would not apply to specified communications about covered UK qualifying stablecoin transfers and exchanges, mirroring the transactional exclusion's own limits — the relief would not extend to lending-like transfers or exchanges into other qualifying cryptoassets. Separately, issuing a qualifying stablecoin is expressly made a controlled activity for financial promotion purposes, so marketing a stablecoin issuance itself is treated differently from marketing its transfer or exchange.

None of this touches anti-money-laundering law. A firm relying on a Financial Services and Markets Act perimeter exclusion may still need registration and controls under the Money Laundering Regulations, depending on the services it performs.

What is still open

The amendments do not establish a future regulated payments regime for stablecoins; HM Treasury has said that stablecoin payment services will be dealt with in separate payment-services reforms. Several boundaries remain untested in the published text: how mixed transactions involving overseas-issued stablecoins or other cryptoassets will be treated, how "temporary" will be interpreted for payment holdings in practice, and which additional classes of collateral provider the FCA might specify as excluded from the collateral relief. A UK qualifying stablecoin can still lose value against the assets backing it, and these amendments do not establish Financial Services Compensation Scheme or Financial Ombudsman Service cover for any particular activity.

What to watch

The instrument needs affirmative resolutions in both Houses before it becomes law; its progress is tracked on Parliament's statutory instruments website. Firms preparing for the regime should track the FCA's authorisation gateway, which is due to open on 30 September 2026, and the 25 October 2027 commencement date for the substantive Regulated Activities Order and Financial Promotion Order changes described here. HM Treasury's planned payment-services reforms, which will address the regulated payments regime for stablecoins that this instrument does not create, remain a separate and later piece of work.