UK to Integrate Stablecoins Into National Payment System as South Korea Accelerates CBDC Launch

UK Builds Unified Legal Framework for Stablecoins

The UK Treasury has published a comprehensive strategy to overhaul the country's payment sector. At its core, the reform aims to bring traditional payment services, stablecoins, and tokenized deposits under a single regulatory framework.

The government is preparing legislation designed to streamline operations for companies that use stablecoins for settlements. Oversight of the issuance and use of such assets in payments will be assigned to the Financial Conduct Authority (FCA).

Treasury Minister Lucy Rigby described the initiative as a move to modernize the financial system and adapt it to blockchain technologies. She said the government sees "transformational potential" in digital assets when it comes to reshaping how businesses and consumers interact.

Why This Matters

The UK is positioning itself as one of the largest economies to formally equate stablecoins with traditional payment instruments at the legislative level. This approach could set a precedent for other jurisdictions and unlock the door for institutional players who have been hesitant to adopt crypto assets for settlements due to regulatory uncertainty.

Additional Reform Pillars

Beyond stablecoins, the strategy encompasses several adjacent areas:

• Regulation of payments conducted by AI agents;
• Expanded FCA authority in open banking;
• Development of tokenized wholesale market infrastructure.

To support financial sector innovation, the government will allocate £1 million to the Centre for Finance, Innovation and Technology. Chris Mayfield Woolard, former interim CEO of the FCA, has been appointed to oversee the development of tokenized systems.

Anthony Young of CoinCover told The Block that the emphasis on stablecoins aligns with institutional investor demand. However, he stressed that mass adoption requires more than just a regulatory framework — robust custody infrastructure is equally critical.

In the near term, the Treasury will launch consultations on reforming electronic money services. The government's ultimate ambition is to establish the UK as a global financial services hub.

South Korea Fast-Tracks Digital Won

The newly appointed Governor of the Bank of Korea, Hyun Song Shin, outlined key financial development priorities during his inaugural address. Chief among them are the launch of the second phase of Project Hangang — the central bank's digital won pilot — and participation in the international Agora initiative.

The central bank plans to broaden the use of its central bank digital currency (CBDC) and deposit tokens. According to the governor, these steps are essential for adapting the monetary system to ongoing digital transformation.

Internationalization of the Korean won is also on the agenda. To achieve this, authorities intend to transition the foreign exchange market to 24/7 operations and establish an offshore settlement system that meets international standards.

Risks and Emerging Technologies

The Bank of Korea will pay particular attention to risks in the non-bank financial sector and the impact of artificial intelligence on labor markets and productivity. Hyun Song Shin noted that AI is already reshaping the economic landscape and demands new analytical approaches.

To maintain financial stability, the regulator will strengthen monitoring of market indicators and expand access to data on off-balance-sheet activities of financial institutions. These measures should improve the assessment of threats amid heightened volatility driven by geopolitical conflicts.

Earlier in April, the Bank for International Settlements (BIS) warned that many stablecoins operate more as investment vehicles than as payment instruments.