The new changes, set to go into effect in May 2026, are designed to improve safeguarding practices among payments companies, according to a Thursday (Aug. 7) press release.

“Safeguarding means that customer money must be kept separate from the firm’s own money so that it is available to be returned if the firm fails,” the release said. “Following constructive engagement with industry, the FCA has confirmed that the new rules will kick in after 9 months, giving industry time to prepare. It has also made changes to ensure that rules are proportionate for smaller firms, such as by removing the requirement for audits if a firm holds less than 100,000 pounds [about $134,000] in customer funds.”

The rules mean consumers will receive more protections, and if a payment or eMoney company fails, their customers are more likely to get a full refund with fewer delays, per the release.

The rules require annual audits by qualified auditors, monthly reporting for payment firms, daily checks to ensure the right amount of money is being safeguarded to protect customers, and better planning for failures to make sure customers get their money back sooner, the release said.

FCA findings show that payment firms that went under between the first quarter of 2018 and the second quarter of 2023 had average shortfalls of 65% of their customers’ funds, according to the release.

“People rely on payment firms to help manage their financial lives,” said Matthew Long, director of payments and digital assets for the FCA, per the release. “But too often, when those firms fail, their customers are left out of pocket. Most of those who responded to our consultation agreed we need to raise standards to protect people’s money and build trust, but any changes needed to be proportionate, especially for smaller firms.”

In other regulatory news, the Federal Deposit Insurance Corp. (FDIC) earlier this week issued guidance allowing banks — under certain circumstances — to use auto-filled forms, thus making it easier for people to open accounts faster.

The update came amid consumer expectations for instant onboarding and competitive pressure from neobanks already using pre-population to capture deposits, PYMNTS wrote Tuesday (Aug. 5).

However, the approach eases one obstacle but also spotlights the fact that banks are still accountable for anti-money laundering (AML) and know your customer (KYC) “controls proportional to their risk profile.”

The settlement is related to the digital currency company’s failure to conduct proper due diligence into cryptocurrency exchange Binance, its former partner, according to a Thursday (Aug. 7) press release.

NYDFS also found “systemic failures” in Paxos’ anti-money laundering (AML) program, the release said. In addition to a $26.5 million penalty due to those deficiencies, Paxos will invest $22 million into its compliance program.

“Regulated entities must maintain appropriate risk management frameworks that correspond to their business risks, which includes relationships with business partners and third-party vendors,” NYDFS Superintendent Adrienne A. Harris said in the release. “The department continues taking significant steps to ensure accountability, in turn protecting consumers and safeguarding the integrity of the financial system.”

Paxos did not reply to PYMNTS’ request for comment.

Paxos had an arrangement with Binance to market and distribute Binance’s dollar-pegged stablecoin, according to the release. An agreement with NYDFS required Paxos to conduct regular due diligence of its partner. However, a NYDFS investigation found the company “did not have appropriate controls in place to effectively monitor for significant illicit activity occurring at or through Binance…”

“Notably, Binance’s lax geofencing restrictions enabled U.S. users to access an unregulated exchange,” the release said.

The investigation found that, between 2017 and 2022, $1.6 billion in transactions flowed to or from the Binance platform involving fraudsters, per the release. Binance processed transactions to and from entities already sanctioned by the United States.

Defects in the Paxos transaction monitoring system kept the company from spotting money laundering, the release said. The company also lacked proper guidelines for handling investigations following a law enforcement request, further keeping it from identifying fraudsters on its platform.

NYDFS was the first regulator in the world to call into question Binance’s safety and soundness in 2023, according to the release. Binance was later fined $4.3 billion by federal regulators, part of a larger crypto crackdown that has since been scaled back.

Under President Donald Trump, the government’s approach to crypto enforcement has changed and narrowed, with the Department of Justice now focusing on crypto cases tied to terrorism, drug trafficking and organized crime.

The deal is designed to strengthen Ripple’s standing in digital asset payments infrastructure, according to a Thursday (Aug. 7) news release.

“Stablecoins are quickly becoming a cornerstone of modern finance, and with Rail, we are uniquely positioned to drive the next phase of innovation and adoption of stablecoins and blockchain in global payments,” Ripple President Monica Long said in the release. “Ripple has one of the most widely used digital asset payment networks in the world, and this acquisition underscores our commitment to helping our global customer base to move money wherever and whenever they need.”

Ripple’s Ripple Payments offers “a broad payout network,” digital asset liquidity, and more than 60 licenses to manage customers’ payment flows, the release said. Rail will add to these capabilities with virtual accounts and automated back-office infrastructure.

“Over the last four years, Rail built the fastest way to settle business payments internationally using stablecoins, and in 2025, Rail is forecasted to process over 10% of the $36 billion global B2B stablecoin payments,” Rail CEO Bhani Kohli said in the release. “Ripple shares our vision, and together, we’re excited to bring our innovation to the millions of businesses that move money internationally.”

Ripple has invested more than $3 billion to date in “acquisitions and strategic opportunities,” and is committed to expanding via mergers and acquisitions (M&A), according to the release. The Rail deal is expected to close in the fourth quarter of this year.

Stablecoins are evolving “from cryptocurrency novelty to enterprise-grade payment infrastructure,” PYMNTS wrote last week.

“The shift is less about speculative upside and more about plumbing — digitizing conventional rails with programmable, fiat-pegged settlements that reduce cost, increase speed and build transparency across borders,” the report said.

The change is being championed at the federal level in the United States, with the Securities and Exchange Commission releasing new guidance on how dollar-pegged stablecoins can function as regulated, fiat-linked payment tools, so long as they meet strict criteria.