Global payment matters - July 2026

We’re delighted to share our knowledge team’s insights on the most important legal changes affecting payments matters around the globe. In our latest update, we highlight key areas of change that have happened over the last quarter. These include:

• Global: Digital Assets in Derivatives Markets; Distributed Ledger Technology (DLT) in Repo Markets
• Asia: China: Draft Finance Law First Reading; Singapore: Strong Financial Action Task Force Financial Crime Rating
• Europe: ESMA Single Reporting Framework and Fund Tokenisation; DLT Architecture for EU Markets; SEPA Reporting Harmonisation; MiFID Order Execution Rules; Eurosystem Payments Strategy
• Middle East: UAE (Dubai): Updated Token Issuance Implementation Guidance
• UK: Systemic Stablecoin Regulation Rules Published; Card Scheme Financial Reporting Update; Fund Tokenisation Guidance; Targeted Crypto Regulation Changes; Plans to Modernise Payments Regulation
• United States: OCC BSA/Sanctions Stablecoin Rule; Stablecoin Issuer CIP Requirements; FDIC BSA/Sanctions Rule; SEC Strategic Plan for Digital Assets; FDIC GENIUS Act Framework

Global

ISDA publishes paper on digital assets in derivatives markets

On June 15, 2026, the International Swaps and Derivatives Association (ISDA) published a paper on digital assets in derivatives markets. The paper was developed by the ISDA Future Leaders in Derivatives 2025/2026 cohort. It analyzes how distributed ledger technologies interact with settlement design, capital treatment, and collateral management in derivatives markets. The paper’s central finding is that institutional adoption hinges on how exposures are structured, margined, and settled under existing prudential frameworks. Its quantitative analysis shows that faster settlement and portfolio compression could cut counterparty exposure and related valuation adjustments by roughly 40–45%. These reductions stem from shorter exposure durations, not from changes in underlying market risk. The paper concludes that post-trade operation and infrastructure are key drivers of the balance sheet efficiencies brought by digital asset derivatives.

Impact: Businesses active in digital asset derivatives should assess whether their settlement arrangements preserve legal finality and support enforceable collateral rights. Where these conditions are met, exposures may qualify for more favorable treatment under existing Basel capital frameworks. Inconsistent classification of digital assets in initial margin models remains a source of dispute risk between counterparties. Industry-wide adoption of ISDA documentation and the Common Domain Model can reduce legal fragmentation across traditional and distributed platforms. Market participants should engage with evolving standards. This ensures scalable, compliant integration of digital assets into derivatives portfolios.

ICMA publishes report on distributed ledger technology in repo markets

On June 4, 2026, the International Capital Market Association (ICMA) published a press release and part one of a report on distributed ledger technology (DLT) in repo transactions. The report reviews relevant technology, digital cash, digital assets, and 34 examples of DLT repo activity between 2017 and 2025. Most activity involved trials, simulations, or proofs of concept, rather than live commercial use. Commercial activity was concentrated on Broadridge’s DLR and JP Morgan’s Kinexys platforms. By end-2025, average daily turnover on those platforms may have exceeded USD 3.7 billion. However, this remained small compared with the wider US repo market. ICMA says DLT is most suited to collateral management, margining, and settlement processes. A second report will assess future adoption later in 2026.

Impact: Businesses may consider targeted pilots or partnerships with existing platforms to build familiarity with DLT systems. They should assess operational, legal, custody, and risk implications before increasing reliance on DLT-based processes. They should also consider platform concentration and interoperability risks. Current activity remains focused on separate ecosystems. Given the early-stage nature of most activity, companies should balance innovation with caution. The ICMA’s second report should provide further guidance on adoption timelines and market development.

Asia

China: Draft Finance Law first reading update

On June 23, 2026, the National People’s Congress Standing Committee began its first deliberation of the Draft Financial Law at its 23rd session. The law would establish China’s first cross-sector financial regulatory statute. It covers banking, securities, insurance, trusts, payments and settlements, and digital financial activities. It formally recognises the legal status of the digital renminbi. It adopts an ‘all financial activities’ approach to supervision. Its sanctions-focussed provisions build on the existing Chinese counter-sanctions and blocking framework. They primarily seek to clarify and supplement the application and scope of relevant prohibition obligations in the context of financial services. Additionally, providing for extraterritorial application in certain circumstances where offshore activities affect China’s financial order.

Impact: The draft establishes a unified supervisory framework with extraterritorial reach in certain circumstances. Businesses with China-facing payment, settlement, or digital asset activities should monitor the legislative development. The formal recognition of the digital renminbi and the ‘all financial activities’ supervisory approach may affect cross-border payment structures and compliance obligations.

Singapore: Strong Financial Action Task Force financial crime rating achieved

On May 6, 2026, the Financial Action Task Force (FATF) published its mutual evaluation report on Singapore’s financial crime framework. The report found that Singapore has a robust and effective system to tackle money laundering, terrorism financing, and proliferation financing. It highlighted strong governance, clear laws, and effective coordination across government and industry. Authorities and regulated companies demonstrate a good understanding of risks, supported by international cooperation. Supervision of financial institutions is risk-based and effective. Law enforcement makes strong use of financial intelligence and asset recovery tools. Singapore was placed on ‘regular follow-up’. This indicates strong overall performance and improvement since 2016, despite stricter standards. However, FATF identified areas for improvement. These include raising risk awareness in some sectors and strengthening controls for foreign legal persons and arrangements.

Impact: Businesses should expect continued focus on demonstrating effective risk management in practice, not just policies. They should strengthen risk assessments for proliferation financing and cross-border exposure. They should monitor developments in information-sharing initiatives and partnerships. Singapore plans to expand collaboration across the financial sector. Organizations in less regulated sectors should improve their awareness of financial crime risks and related obligations.

Europe

EU: ESMA speech on single reporting framework and fund tokenisation rules

On June 12, 2026, the European Securities and Markets Authority (ESMA) Chair delivered a speech in Brussels. The speech was at the European Fund and Asset Management Association (EFAMA) conference. ESMA proposes a single EU reporting template to replace over 100 fund reporting obligations. Data would be reported once and shared across supervisors. Phase 1 integrates reporting under the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for Collective Investment in Transferable Securities Directive (UCITS). On fund tokenisation, ESMA raised questions on distributed ledger technology (DLT) record status, settlement finality and investor holding models. The speech also addressed market resilience and retail investor participation.

Impact: Asset managers should map current EU reporting obligations under AIFMD and the UCITS Directive. ESMA’s single reporting template will consolidate these first. Businesses should assess system readiness for the new modular format. ESMA expects to consult on draft technical standards by end of 2026. Phase 1 could go live in the first half of 2029 at the earliest. On tokenisation, businesses should monitor ESMA’s engagement with national competent authorities. Open questions on DLT record status and settlement finality may affect product design timelines. Fragmented national approaches to registers and custody could limit cross-border scalability. Businesses should also review fund exposure to concentrated technology positions and US equities. Enhanced reporting on liquidity management tools is expected under the revised AIFMD and UCITS Directive. The forthcoming consultation is an important opportunity for industry engagement.

EU: Paper outlines future of distributed ledger technology for EU markets

On April 29, 2026, the Association for Financial Markets in Europe (AFME) published a press release and paper. It outlines a future distributed ledger technology (DLT)-based architecture for European capital markets. The paper aligns with the European Central Bank’s ‘Appia’ initiative and UK efforts to coordinate digital finance development. AFME proposes moving from fragmented, centralised systems to a regulated, network-based market structure. This model would use distributed platforms operated by regulated entities, supported by automation and smart contracts. AFME also envisages public-permissioned ledgers and multi-chain interoperability to enable efficient movement of assets and liquidity.

Impact: Financial institutions should assess their readiness to adopt DLT-based platforms, including integration with central bank and commercial bank money solutions. They should also prepare for interoperability standards and multi-chain environments across trading and settlement systems.

EU: MiFID order execution rules update

On April 14, 2026, the European Commission adopted new rules under the Markets in Financial Instruments Directive (MiFID). The rules set criteria for how businesses execute client orders and assess performance. They include requirements on selecting trading venues and monitoring execution quality. The European Parliament and Council will review the rules. If approved, they will apply 18 months after entry into force.

Impact: The rules matter because they change how investment businesses handle client orders. They affect companies trading financial instruments on behalf of clients. Businesses might review and update order execution policies and monitoring systems. They may need to invest in systems and controls to meet the new standards. Businesses may need enhanced record-keeping processes to demonstrate compliance with best execution obligations. Trading venues and brokers might face increased scrutiny regarding pricing transparency and order handling practices. Businesses relying on algorithmic trading systems may need additional testing and governance controls.

EU: SEPA reporting harmonisation update

On April 1, 2026, the European Banking Authority (EBA) adopted a decision on Single Euro Payments Area (SEPA) reporting. The decision harmonises how national authorities report payment data. It requires authorities to submit data by October 9 of each year. The change avoids duplicate reporting to different EU bodies.

Impact: The decision simplifies reporting processes across the EU. It affects national authorities and payment service providers indirectly. Authorities might adjust reporting timelines and processes to meet the new requirement. Businesses providing payment services may need system updates to align reporting formats and submission deadlines. Businesses handling cross-border payment data might require additional coordination with national reporting authorities. The shorter reporting timeframe may increase operational pressure during reporting periods and require faster internal data validation. The change reduces administrative burden and improves data consistency across EU institutions.

EU: Eurosystem Comprehensive Payments Strategy Published

On March 31, 2026, the European Central Bank published a comprehensive payments strategy. It covers retail, wholesale, business-to-business, and cross-border payments. It sets a forward-looking vision for a competitive and innovative European payments market. The framework responds to rapid digitalisation and technological developments in payments. It aims to improve existing infrastructures while supporting new payment solutions. Four priorities include financial stability, resilience, innovation, and supporting the euro’s global role. The strategy promotes tokenisation, distributed ledger technology, and the digital euro. Central bank money remains the anchor of trust in the system. (See also the Eurosystem’s comprehensive payments strategy.)

Impact: The strategy shapes the future direction of EU payments policy and infrastructure. Banks and payment providers may adapt to increased innovation and integration requirements. Businesses may need to invest in new technologies such as tokenisation and distributed ledger solutions. Payment service providers should align with evolving standards and interoperability expectations. The digital euro may influence retail payment models and competition dynamics. Corporate users may benefit from more automated and integrated payment processes. Cross-border payments may be expected to become faster, cheaper, and more transparent. Businesses should monitor developments and prepare for gradual implementation changes.

Middle East

UAE: Dubai issues updated token issuance implementation guidance

On July 1, 2026, Dubai’s Virtual Assets Regulatory Authority (VARA) published updated implementation guidance. This expands on its April 2026 clarifications to the Virtual Asset Issuance Rulebook. The updated guidance sets out binding compliance timelines and enforcement expectations for licensed and prospective issuers. VARA confirmed that relevant Dubai issuers must evidence full compliance by September 30, 2026. This applies to stablecoins, asset-referenced tokens, and other virtual assets. The guidance introduces a structured self-assessment process for issuers. Issuers must submit a compliance certification covering governance, disclosure, reserve management, and risk controls. VARA also confirmed enforcement action from October 1, 2026, for non-compliant issuers. This may include licence suspension and financial penalties.

Impact: Businesses holding or seeking VARA token issuance licences should prioritise the self-assessment certification. They should complete this before the September 30, 2026, deadline. Companies planning stablecoin or asset-backed token issuances should review governance arrangements, disclosures, and reserve structures. These should be checked against the updated requirements. The enforcement timeline confirms VARA’s move from guidance to active supervision. Early compliance engagement is therefore essential. Issuers using VARA-licensed intermediaries should verify those intermediaries have completed compliance submissions.

UK

UK: Bank of England publishes draft rules for systemic stablecoin regulation

On June 22, 2026, the Bank of England (BoE) published a policy statement and draft Code of Practice for issuers of sterling-denominated systemic stablecoins. This marks a key milestone in establishing the UK’s regulatory framework for stablecoins. The rules allow issuers to hold up to 70% of backing assets in short-term UK government debt. The remaining 30% must be held in central bank deposits (i.e. with the BoE) to support prompt redemptions. A temporary issuance guardrail of £40 billion per systemic stablecoin replaces previously proposed limits on the holdings of any one person. The BoE is working jointly with the Financial Conduct Authority (FCA) to deliver an end-to-end regime, noting that non-systemic issuers will be subject to FCA rules.

Impact: The BoE intends to finalise rules by the end of 2026, with regulated stablecoins operating from 2027. Stablecoin issuers targeting UK systemic status should begin assessing compliance with the proposed backing-asset requirements now. The 70/30 split between government debt and central bank deposits will shape treasury and liquidity management strategies. The £40 billion issuance guardrail may constrain growth plans for large-scale stablecoin products, although it is expected to be removed in the medium term. Businesses should monitor consultation developments and engage with regulators before rules are finalised. Feedback on the draft Code of Practice is open until September 22, 2026.

UK: Payment Systems Regulator card scheme financial reporting update

On May 21, 2026, the Payment Systems Regulator (PSR) published CP26/1, a consultation on proposed direction and guidelines for regulatory financial reporting (RFR). The RFR remedy is the third of three remedies stemming from the PSR's market review of card scheme and processing fees, which found that Mastercard and Visa schemes are not subject to effective competition. Under the proposals, the schemes would be required to provide a profit and loss account for their UK card operations, with relevant disaggregation, plus contextual information on their UK financial performance. The PSR stated it found evidence consistent with the schemes' profit margins being higher than expected in competitive markets. 

Impact: The PSR expects to finalize the earlier two remedies (the information, transparency and complexity remedy and the Pricing Governance remedy) by summer 2026. The RFR remedy targets Mastercard and Visa's UK card scheme businesses directly. Affiliates or partners with UK card issuing, acquiring, or processing operations should assess indirect exposure. Required reporting includes a disaggregated profit and loss account plus contextual UK financial performance data. This data may inform further interventions on scheme and processing fees affecting broader payment ecosystem costs. Compliance costs, including gap analysis, system set-up, and audit requirements, were flagged as concerns during consultation. Directly affected parties were invited to respond to the consultation by July 3, 2026. Businesses should also review the draft Specific Direction and Regulatory Accounting Guidelines published alongside this consultation. Businesses should monitor final directions once published later this year.

UK: Regulator sets out guidance to support fund tokenisation

On April 30, 2026, the Financial Conduct Authority (FCA) published guidance to support innovation in fund tokenisation. The guidance explains how companies can use distributed ledger technology (DLT) within the existing regulatory framework. It also introduces new rules to improve fund dealing efficiency, including an optional Direct to Fund (D2F) model. This allows investors to transact directly with a fund, whether it is traditional or tokenised. The guidance forms part of the FCA’s wider roadmap for digital assets in asset management.

Impact: Businesses should assess opportunities to adopt tokenised fund structures within existing rules. They should also consider whether DLT-based arrangements meet regulatory requirements on custody, settlement, and record-keeping. The optional D2F model may improve operational efficiency and simplify investor access to funds.

UK: Treasury proposes targeted crypto regulation changes

On April 21, 2026, HM Treasury (HMT) published a policy note and draft statutory instrument proposing changes to the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026. The amendments are designed to support stablecoin payments and improve regulatory clarity. UK-issued qualifying stablecoins would be excluded from certain cryptoasset dealing and arranging activities. This is intended to reduce regulatory friction before wider payment services reforms are introduced. However, lending and borrowing involving these stablecoins would remain regulated, allowing the Financial Conduct Authority (FCA) to address consumer risks. Companies providing custody or safeguarding services would still need cryptoasset permissions. The draft also makes technical changes affecting financial promotions, proprietary trading, market making, and central securities depositories.

Impact: HMT sought industry feedback on the draft instrument, including potential frictions around collateral use. The response window closed May 22, 2026. Companies with UK or cross-border stablecoin activities should monitor for the Government response and plan for transitional compliance.

UK: Government unveils plans to modernise payments regulation

On April 21, 2026, during Fintech Week in London, the UK government announced a package to modernise payments regulation. The measures aim to support innovation while maintaining trust and strong consumer protections. The government will soon consult on reforms to payment services and electronic money regulation, including how the framework should adapt to technological change. The proposals include:

• integrating payment services and electronic money regulation into the UK’s core financial services framework. This creates a single regime for traditional and tokenised payments, including stablecoins and tokenised deposits
• regulating stablecoins used for payments where issued under the forthcoming UK regulated activity for stablecoin issuance
• exploring how payment services regulation should adapt to payments conducted by AI agents
• and giving the Financial Conduct Authority (FCA) new powers to regulate the future of Open Banking, including supporting new Open Banking payment models within commercial schemes.

Impact: Businesses should prepare to engage with the upcoming consultation and assess potential regulatory impacts. They should also review how stablecoin and tokenised products may operate within a unified framework. Open Banking participants should anticipate expanded FCA oversight and new commercial payment structures.

United States

US: Notice of sanctions stablecoin compliance rule published

On June 22, 2026, the Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking (NPR). The notice concerns Bank Secrecy Act (BSA) and sanctions compliance standards. It applies to OCC-supervised permitted payment stablecoin issuers (PPSIs) under the GENIUS Act. The NPR would require PPSIs to comply with certain BSA provisions. It also covers related Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) regulations. These include anti-money laundering/countering the financing of terrorism (AML/CFT) and sanctions requirements. It proposes a notice and consultation framework. The framework requires the OCC to consult the FinCEN. This would apply before AML/CFT enforcement or supervisory actions against permitted payment stablecoin issuers.

Impact: The NPR provides insight into the OCC’s approach to applying BSA requirements to permitted payment stablecoin issuers. Banks and non-bank stablecoin issuers supervised by the OCC should prepare to meet BSA/AML and sanctions obligations based on the final rule once it is adopted by the OCC. Additionally, review with the FinCEN customer identification programme proposal and coordinate compliance planning across both rulemakings.

US: Federal agencies propose stablecoin issuer CIP requirements

On June 18, 2026, the Financial Crimes Enforcement Network (FinCEN) and the primary federal payment stablecoin regulators issued a notice of proposed rulemaking (NPR). It would implement customer identification programme (CIP) requirements for permitted payment stablecoin issuers (PPSIs). The requirements arise under the GENIUS Act. The CIP NPR would impose CIP obligations on PPSIs. These would be comparable to existing requirements for other financial institutions. CIP obligations would apply only to primary-market activity. This covers direct interactions between a PPSI and a payment stablecoin user or holder. Examples include issuing, converting, or redeeming stablecoins with the user. They also include related services, such as stablecoin custody. This is consistent with the earlier anti-money laundering/countering the financing of terrorism (AML/CFT) proposed rule approach.

Impact: Stablecoin issuers should establish CIP procedures for primary-market participants. They should monitor the final CIP rule from the FinCEN and the primary federal regulators. This will confirm CIP requirements. They should also review the proposed CIP scope. They should assess operational readiness for identity verification requirements. These requirements should align with existing financial institution standards. Comments on the NPR are due August 21, 2026.

US: FDIC publishes Bank Secrecy Act/sanctions stablecoin compliance rule

On June 5, 2026, the Federal Deposit Insurance Corporation (FDIC) published a notice of proposed rulemaking (NPR). It would establish Bank Secrecy Act (BSA) and sanctions compliance standards. The standards apply to FDIC-supervised permitted payment stablecoin issuers (PPSIs) under the GENIUS Act. The board approved the NPR on May 22, 2026. The FDIC proposal is similar to the Office of the Comptroller of the Currency (OCC) proposed rule above. It would require PPSIs to comply with certain BSA requirements. These include anti-money laundering/countering the financing of terrorism (AML/CFT), sanctions programme, and reporting requirements. These align with the Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) requirements.

Impact: FDIC-supervised stablecoin issuers should prepare for BSA/AML and sanctions compliance obligations. They should monitor for the final FDIC rule. They should coordinate compliance planning with the FinCEN customer identification programme proposal. They should also consider the Office of the Comptroller of the Currency (OCC) NPR. This supports a consistent approach across federal regulators. The feedback window on the proposed rule is open until August 4, 2026.

US: SEC publishes FY 2026–2030 strategic plan for digital assets

On June 2, 2026, the SEC published its Draft Strategic Plan for public comment. The plan covers fiscal years 2026 through 2030. Its first objective is to “provide a firm regulatory foundation for digital assets and distributed ledger technologies.” It emphasises clarifying how federal securities laws apply to digital assets. It also supports tokenised offerings and on-chain financial infrastructure. The plan promotes coordination with the Commodity Futures Trading Commission (CFTC). This covers custody, trading, and staking services.

Impact: This signals a sustained pro-digital-asset regulatory posture from the SEC through 2030. Payment service providers and financial institutions should review the draft plan. They should assess how SEC securities law clarification may affect product structuring. They should also assess how CFTC coordination may affect compliance strategies. The public comment period closed July 2, 2026.

US: FDIC approves GENIUS Act stablecoin prudential framework

On April 7, 2026, the Federal Deposit Insurance Corporation (FDIC) Board approved a notice of proposed rulemaking (NPR). The NPR would implement the GENIUS Act. The NPR would establish a prudential framework for FDIC-supervised permitted payment stablecoin issuers. It includes requirements for reserve assets, two-business-day redemption, capital, and risk management. Reserves backing payment stablecoins would not qualify for pass-through deposit insurance. Stablecoin holders would therefore not receive pass-through deposit insurance. The proposal also clarifies the treatment of tokenized deposits. Tokenized deposits meeting the statutory ‘deposit’ definition are treated like other deposits.

Impact: FDIC-supervised stablecoin issuers will face new prudential requirements. They should monitor the final FDIC rule. This will confirm requirements and support compliance planning.

Co-authored by Jonathan Botham and Rachel Campion

Further reading:

• Unclaimed cryptocurrency: US states are accelerating efforts to take control of dormant digital assets
• FS+ Country Updates: spotlight key regulatory developments across global markets – June 2026
• EU: ESMA speech on single reporting framework and fund tokenisation rules
• UK: BoE finalises systemic stablecoin regime