May 2026 : FCA investigates Mastercard, PayPal and Visa
Samer Baqain
Inside this issue
May’s theme is regulated growth. Across the month, the FCA and other UK authorities continued to show support for innovation, but with a clear expectation that growth must be matched by stronger governance, clearer market conduct and earlier regulatory engagement.
The direction of travel is becoming more practical. Digital wallets, tokenisation, cryptoasset authorisation and fast-growing firms are all being brought into a more structured supervisory environment. The message for firms is not that innovation is being slowed down, but that regulators want to see innovation supported by proper controls, transparent market behaviour and clear accountability.
FCA investigates Mastercard, PayPal and Visa
The FCA confirmed in May that it is investigating Mastercard, PayPal and Visa under competition law in relation to suspected anti-competitive conduct linked to the funding and usage of PayPal’s digital wallet. The FCA has not reached any conclusions or made any findings at this stage, but the investigation is significant because it shows that digital payments are now being scrutinised not only from a conduct and consumer protection perspective, but also through the lens of competition and market structure.
This matters because digital wallets, card networks and payment platforms are increasingly central to how consumers and businesses make payments. As these models become more embedded, regulators are likely to look more closely at whether commercial arrangements support fair competition, customer choice and open access.
For firms, the broader lesson is that payments governance cannot focus only on compliance with payment services rules. Firms also need to understand how their commercial arrangements, partnerships and platform dependencies could affect competition, customer outcomes and market access.
FCA and Bank of England set out shared vision for tokenisation
In May, the FCA and the Bank of England set out a shared vision for tokenisation in UK wholesale financial markets. The announcement reflects growing policy support for the use of tokenisation in areas such as issuance, trading and settlement, while also making clear that innovation must be developed in a way that protects market integrity and financial stability.
This is an important step because tokenisation is moving from a conceptual opportunity into a more structured regulatory discussion. The focus is no longer simply whether tokenisation could improve market efficiency, but how it should operate safely within the UK’s financial market infrastructure.
FCA opens Scale-up Unit to fast-growing solo-regulated firms
The FCA opened applications in May for solo-regulated firms to join its Scale-up Unit. The initiative is designed to support fast-growing financial firms as they scale their businesses and navigate regulatory expectations.
This is a positive signal for innovation. It shows that the FCA wants to engage with growing firms earlier and support responsible scaling, rather than only intervening once problems have already developed. However, it also reinforces the importance of firms being able to demonstrate that their controls, governance and senior management oversight are growing at the same pace as the business.
Cryptoasset firms can request pre-application meetings from 11 May 2026
From 11 May 2026, cryptoasset firms preparing for the new FSMA regime can request pre-application meetings with the FCA. This is a significant development because it gives firms an opportunity to engage with the regulator before submitting formal applications.
For cryptoasset firms, this marks a shift from policy preparation to authorisation readiness. Firms will need to think carefully about their business models, governance arrangements, systems and controls, financial crime frameworks, safeguarding arrangements where relevant, and how they will meet regulatory expectations under the new regime.
Our Thoughts
- May showed that innovation is being encouraged, but only where firms can evidence strong governance, clear accountability and effective controls.
- Payments are being looked at through a wider lens, including competition, customer choice and market access.
- Tokenisation and crypto are moving closer to practical regulatory delivery, meaning firms should start preparing early rather than waiting for final implementation.
- Fast-growing firms need to ensure their compliance, risk management and oversight arrangements scale at the same pace as the business.
