From stablecoins to SEPA, fintech leaders are calling for smarter, faster regulation. But can policy ever keep pace with regulation? Payment Expert speaks to Equals Money’s James Simcox for his view.
At events like Money20/20, the spotlight often falls on the next big product or innovation, something which promises to change the payments landscape.
These announcements make headlines, and understandably so. After all, who doesn’t want to imagine a sci-fi future where robots handle transactions with no human input? But amid all the noise about what’s coming next, it’s easy to overlook what really matters right now.
Today, the payment landscape isn’t being shaped by flashy technology, but by something far less glamorous: regulation.
Equals Money, a fintech focused on simplifying cross-border business finance, understands just how central regulation and compliance are to success in this environment. The London-based fintech provides multi-currency accounts, corporate expense cards and spend management tools to over 30,000 businesses.
Speaking to Payment Expert on the sidelines of a packed Money20/20 earlier this year, Chief Operations and Product Officer James Simcox made it clear that Equals Money’s focus on compliance is anything but an afterthought.
“Over 25% of our staff are in compliance roles, which is not what you would necessarily expect in a fast-growing fintech, but it’s how we’re a fast-growing fintech. Compliance is a huge enabler for us and we invest a lot in it.”
Let the fintechs in
While regulation can empower firms at its best, at its worst, it can exclude. For Simcox, one of the clearest examples of this is the EU’s historically slow progress in allowing fintechs direct access to key payment schemes, particularly the Single Euro Payments Area (SEPA).
SEPA is an EU initiative designed to enable fast, standardised euro bank transfers across member states. It ensures individuals and businesses can send and receive euro payments under the same basic conditions, rights and obligations, regardless of their location within the zone.
While traditional banks have long enjoyed direct access to SEPA, most fintechs have been forced to rely on intermediaries.
“The EU until recently, and they’ve now solved it, hasn’t been fantastic at opening SEPA up to participants,” Simcox said. “So whilst we could participate indirectly in taking SEPA, joining Target2 and acting as a credit participant hasn’t been available to us.”
Without direct access, firms like Equals Money have to depend on sponsor banks, traditional institutions which process payments on behalf of non-bank entities under their own regulatory umbrella.
While this relationship gives fintechs access to vital payment networks, it also introduces significant constraints. Sponsor banks often prioritise their own commercial interests, adopt cautious onboarding processes and may limit the range of services a fintech can offer.
“If you couldn’t join SEPA directly, you’re relying on a bank offering you instant payments, which wasn’t always available,” Simcox said. “Small fintechs can’t get sponsor banks. It doesn’t work.”
He pointed to Lithuania as a rare exception. In the late 2010s, the country’s central bank became one of the first regulators in the EU to open its infrastructure to fintechs, helping transition the country into a hub for e-money and payment institutions. Still, Simcox suggested it “wasn’t really the right way to do it.”
What has changed is the EU’s decision to revise the settlement and access rules for SEPA and Target2. Under the new framework, licensed non-banks can apply to become direct participants, removing the need to operate through sponsor banks.
“What we’re now seeing, though, is the EU’s changed the rules to allow participants who are not banks to take the credit section, which is great, and join Target2, which will really help competition,” Simcox said.
Stablecoins: A payment rail, not a crypto bet
Stablecoins remain a relatively young area in terms of regulation, but it is the US that has dominated the headlines so far. On June 17, the Senate passed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, the country’s first major legislative milestone focused specifically on payment-oriented stablecoins.
The bill has drawn criticism, with some arguing it was rushed and lacks adequate consumer protection. Still, it marks a clear statement of intent.
In Europe, by contrast, the conversation is still clouded by a fundamental misunderstanding of what stablecoins are, according to Simcox, particularly around how they are used..
The EU’s Markets in Crypto-Assets (MiCA) regulation, passed in 2023, was introduced as the world’s first comprehensive digital asset framework. It sets out rules for everything from crypto issuance and stablecoins to exchanges and wallet providers.
But in Simcox’s view, the EU’s approach tries to do too much, too soon and has ultimately stifled innovation, especially for stablecoins intended for payments rather than speculation.
“The risk, I think, is that the regulation lands too heavily and treats it like crypto,” he warned. “When in reality, it’s a technical mechanism for doing faster payments. That would be a real shame.”
For Simcox, stablecoins are infrastructure, not investment vehicles. This view is increasingly shared among fintechs globally, who see stablecoins as a tool to improve cross-border payments by combining blockchain speed with the price stability of fiat-pegged assets.
“We’re not offering Bitcoin to our customers,” Simcox said. “We’re not offering Ethereum. We’re not getting involved in that world. But if a customer can make a payment to us in a digital euro or a digital dollar and it settles instantly, and we can go straight through with that. We love that.”
Simcox acknowledges strong consumer protection is essential. But in Europe‘s case, he believes a one-size-fits-all regulatory approach may be doing more harm than good, delaying the very innovation it aims to support.
“I want regulators to handle stablecoins differently. There are two ways to look at it. You can custody them, that’s one way, but if they’re just a payout method, we need to enable on-chain payments for customers with fiat legs and we can’t regulate that the same way you regulate custody.”
Enabling innovation with room to improve
The debate around stablecoins underscores a broader conversation happening: regulation plays a crucial role in enabling innovation, but only if it is done right. That is no easy task when regulators must make decisions without a clear view of what the future holds.
One increasingly popular strategy is the use of regulatory sandboxes. These controlled environments allow firms to test new products or technologies with real users, without immediately falling foul of compliance rules. A recent example is the Financial Conduct Authority’s (FCA) Supercharged Sandbox, designed to accelerate AI adoption across the UK financial sector.
Suman Rao, Managing Director for the UK and Ireland at Avaloq, described the initiative as potentially “transformative” for the wealth management industry, particularly for firms held back by limited access to data and expertise.
This kind of regulatory flexibility not only fuels innovation but also supports the development of a more inclusive and dynamic financial ecosystem. With this in mind, Simcox was asked what specific regulatory changes he would like to see in the near future.
“Consumer protection in Open Banking payments is one. The UK has done a lot with authorised push payment (APP) fraud; that’s great, but we want Open Banking to take off. Consumers can’t charge back Open Banking transactions,” he responded.
“In the UK maybe they could get through it, through APP fraud, maybe they couldn’t. But lots of markets, in Europe particularly, there’s no protection for consumers on Open Banking. As great as it is, why would I use it, right? It’s great for the merchant; there are no protections, but it’s bad for the consumer.
Simcox also called for long-awaited reforms to finally move forward.“I would also love PSD3 to just happen and simplify European Payment Regulations because it promises so much, and I just would like it to happen,” he said.
His final points returned to the theme of access and infrastructure.“I would ask [regulators] to simplify the process for PSPs to join SEPA directly. Unlocking payment networks is the fastest way to enable competition, right? Always, hands down.
“And I would also ask them to look at how stablecoins can be treated better as a payment method. To me, that’s the biggest challenge of the year.”
