Payments firms: the stablecoin opportunity and what it demands

Stablecoins are rapidly establishing themselves as a credible payment method. Driven by demand for faster settlement, lower transaction costs and improved cross-border capabilities, genuine stablecoin payments volumes more than doubled to an estimated US$390 billion in 2025, with business-to-business transfers, up more than 700% year on year, now the largest and fastest-growing category.

Regulators are also moving quickly. Most recently, on 22 June 2026 the Bank of England (BoE) published a policy statement and draft Code of Practice for systemic stablecoin issuers which marks a major step in establish a clearer regulatory framework for stablecoins in the UK. 

Retailers and consumers are beginning to view stablecoins less through a ‘crypto’ lens and more as the next evolution of digital payments infrastructure. 

For payment service providers (PSPs), the strategic question is no longer whether stablecoin payment rails will become relevant, it’s how to adopt them in a way that is controlled, commercially viable and regulatorily compliant. 

Navigating a change in financial infrastructure

Historically, payments infrastructure evolved through a systems-based architecture, with fragmented channels, siloed processes and multiple ledgers across counterparties. The industry is now moving towards a network-based architecture, enabled by tokenisation and distributed ledger technology.

For payments firms, the key challenge is managing this transition without compromising resilience or safeguards. That requires a clear assessment of how stablecoin payment rails fit within existing operating models and customer propositions. Integration is not simply a technical exercise, it means rethinking core processes, risk frameworks, operating models and revenue structures. Questions around interoperability with legacy systems, regulatory alignment and scalability of chosen solutions will all be critical.

The cost of that work is significant too. Investment in technology, third-party integration and staff training all carry a material cost, and for firms already operating on thin margins, the cash flow impact of funding that transition can create real strain alongside the operational demands it places on the business.

Firms that successfully adapt their operating model may unlock substantial competitive advantages. For those operators that remain reliant on outdated infrastructure, they risk losing competitive advantages and mounting margin pressure as settlement becomes faster, cheaper and increasingly automated.

Rethinking fee structures

The shift towards digital assets means the pressure on legacy fee models is real. Traditional revenues built on interchange fees, FX spreads and settlement float are all impacted by the introduction of stablecoins. Firms most exposed are those whose income is concentrated in cross-border FX spreads and interchange - effectively charging for the friction that stablecoins remove. Larger players are already pivoting away from fee-per-transaction models towards infrastructure fees, compliance-as-a-service and integration revenues.

Some payments firms may decide to expand their product offering to diversify revenue streams, for example, by securing a banking licence or offering buy now, pay later (BNPL) products. Both options carry their own regulatory cost — in particular BNPL providers will be regulated by the FCA from 15 July 2026.

Increased cost of regulatory compliance 

There have been significant regulatory developments in the sector, including: 

• The FCA published guidance in January 2026 explaining how firms involved in cryptoasset activities should apply the Consumer Duty. This will raise the bar considerably for delivering fair outcomes, managing risks and ensuring operational resilience, including where firms distribute products originated by unregulated or overseas providers.
• New legislation published in February 2026 establishes categories of regulated cryptoassets and defines a broad range of regulated activities, including stablecoin issuance, custody, trading and staking. Firms engaging in these activities will need FCA authorisation or exemption when the regime comes into force, expected in October 2027.
• In April 2026, HM Treasury consulted on amendments to the cryptoasset regime intended to ease the path for stablecoin payments. The proposals would carve UK-issued qualifying stablecoins out of the new ‘dealing’ and ‘arranging’ activities where they are used for payments, but firms holding or controlling customer assets would still require FCA safeguarding authorisation. Firms that rely on an exclusion without first confirming whether safeguarding or another regulated activity is triggered risk carrying out unauthorised business. The FCA has also proposed extending the Senior Managers and Certification Regime to cryptoasset firms, meaning named senior managers would be personally accountable for operational failures and misconduct once the regime takes effect — raising the governance and accountability stakes for firms entering the sector.From May 2026, the FCA’s Supplementary Regime introduced enhanced safeguarding requirements, imposing stricter expectations on how firms protect customer funds and increasing both compliance complexity and cost. 
• In June 2026, the final policy statement and draft Code of Practice for systemic stablecoin issuers was published by the BoE. Significantly, earlier proposals to impose per-user holding limits were scrapped amid concerns it was overly restrictive. Instead, there will be a temporary issuance guardrail, initially set at £40 billion per systemic stablecoin This is expected to be reviewed and ultimately removed as the market matures. Reserve requirements were also eased, permitting issuers to hold up to 70% of backing assets in short-term UK government debt (up from 60%) to improve the commercial viability of sterling stablecoin issuance. These changes have been broadly welcomed by the sector.
• Greater regulatory clarity reduces uncertainty and enables strategic planning. But compliance costs are rising materially, particularly for mid-market PSPs. The challenge for many firms will be allocating sufficient resource for compliance while continuing to invest in innovation and growth, including stablecoin payment rails. For smaller or less well-capitalised firms, that burden is especially acute and risks widening the gap between firms that move early and those that do not.

Strategic questions for payments firms 

When introducing stablecoin payment rails, PSPs face a series of strategic and operational decisions that will shape their commercial proposition and risk profile. There are no straightforward answers, and deciding the best way forward can take up significant management time and resource.

• Should firms build their own custody infrastructure, or rely on third-party providers? Each option carries different cost, risk and control implications
• Decisions regarding which blockchains to support are important. Scalability, interoperability, governance and regulatory acceptance vary significantly across networks. The right choice will depend on a firm’s specific needs and whether security, speed or scalability is the priority
• Firms must also determine whether they intend to provide proprietary digital wallets which would give visibility of each customer transaction allowing control over risk management at point of payment, or integrate with third-party wallet providers, which would require extensive due diligence and ongoing monitoring to compensate for reduced transaction visibility
• Error handling presents a further challenge. Unlike traditional card payments, blockchain-based transactions are typically irreversible. Firms will need clearly defined remediation and dispute-resolution processes that meet both regulatory expectations and consumer outcomes
• Fraud risk deserves particular attention. The Authorised Push Payment (APP) fraud reimbursement scheme raises the stakes for any firm handling payment flows, and stablecoins introduce new vulnerabilities that must be properly understood before deployment.

Stablecoins are reshaping the payments landscape and forcing firms to respond or risk ceding market share. Firms that successfully adopt digital asset payment rails stand to benefit from stronger growth prospects, improved margins and a more competitive position, but will require material changes to existing business and operating models. 

Yet the investment required to build or integrate digital asset infrastructure is substantial, challenging smaller and less-established players already under pressure from a changing market environment and the rising cost of regulatory compliance.

For more information, contact Russell Simpson or Jarred Erceg.