Whereas Part 1 of this outlook was about proving control effectiveness, Part 2 is about understanding how the regulatory architecture itself is changing.
For payments and crypto firms, 2026 will reshape not just supervisory expectations, but how the sector is regulated and where the regulatory perimeter sits.
Again, the anchor is the FCA’s Strategy 2025–2030, particularly its focus on joined-up regulation, reduced fragmentation and markets that function in the interests of consumers.
Safeguarding reform: the defining operational challenge
For payment institutions and e-money firms, safeguarding reform is the most consequential regulatory change on the near-term horizon. The FCA’s move toward a more prescriptive, CASS-style safeguarding regime fundamentally raises the bar on governance, record-keeping and assurance.
With key requirements taking effect in May 2026, firms should be entering the final phase of implementation. Supervisory focus is likely to centre on the robustness of safeguarding accounts, reconciliation integrity, acknowledgement structures, and the credibility of wind-down and return-of-funds arrangements. The introduction of resolution-pack style expectations reinforces the FCA’s objective of ensuring orderly firm failure without consumer harm.
Safeguarding is no longer an operational hygiene factor; it is a core prudential discipline. Boards should expect to provide explicit oversight and challenge.
PSR integration into the FCA: consolidation, not deregulation
The integration of the Payment Systems Regulator into the FCA reflects a broader policy objective to streamline payments oversight and align it with the UK’s National Payments Vision. For firms, this should not be mistaken for deregulation.
Instead, 2026 is likely to bring a more coordinated supervisory approach across competition, conduct, fraud and payments infrastructure. This reduces regulatory arbitrage and increases the likelihood of faster escalation where systemic issues are identified. Firms should plan on the basis that payments supervision will become more, not less, joined-up.
Stablecoins: from experiment to regulated payments instrument
Stablecoins occupy a distinct place in the 2026 landscape. The FCA has signalled a clear intention to support innovation in stablecoin payments through sandbox-based approaches, while the Bank of England develops a regime for systemic stablecoins.
The strategic implication is significant: stablecoins are being treated as payments infrastructure rather than speculative cryptoassets. Firms exploring issuance, custody or use of stablecoins for payments will need to meet standards that resemble those applied to traditional payment instruments, including governance, safeguarding, resilience and conduct.
The wider crypto regime: execution replaces perimeter debate
Beyond stablecoins, the UK is moving decisively toward a comprehensive crypto regulatory regime. Legislation to bring core crypto activities within the regulatory perimeter, alongside FCA consultations on conduct, market abuse and prudential requirements, shifts the challenge from “is this regulated?” to “can we operate compliantly at scale?”
For 2026, the critical risk for crypto firms is execution risk. Implementation programmes will need clear governance, realistic timelines and board sponsorship. Strategic decisions about which activities to pursue – or exit – will increasingly be driven by capital requirements, systems capability and conduct obligations rather than regulatory ambiguity.
Strategic choices for boards in 2026
Taken together, safeguarding reform, regulatory consolidation and crypto perimeter expansion act as a competitive filter. Boards should use 2026 to make deliberate choices about where to focus investment, which risks to retain, and which business models remain viable once regulatory costs are fully priced in.
The FCA’s strategy is not anti-growth. It is, however, explicitly intolerant of fragility. Firms that invest early in robust governance, resilient operations and credible consumer protection will be best placed to scale sustainably in the next phase of the UK payments and digital assets market.
