PART 5Regulation of payment systems

“Payment system” etc

41Meaning of “payment system”

(1)

In this Part “payment system” means a system which is operated by one or more persons in the course of business for the purpose of enabling persons to make transfers of funds, and includes a system which is designed to facilitate the transfer of funds using another payment system.

(2)

But “payment system” does not include—

(a)

any arrangements for the physical movement of cash;

(b)

a system which does not make any provision for the transfer of funds by payers, or to recipients, in the United Kingdom;

(c)

a securities settlement system operated by a F1recognised CSD;

(d)

a system operated by a recognised clearing house F2or a recognised CSD;

(e)

any other system whose primary purpose is not that of enabling persons to transfer funds.

F3(2A)

In this Part—

“funds” includes digital settlement assets (except in section 41(2)(e));

“digital settlement asset” means a digital representation of value or rights, whether or not cryptographically secured, that—

(a)

can be used for the settlement of payment obligations,

(b)

can be transferred, stored or traded electronically, and

(c)

uses technology supporting the recording or storage of data (which may include distributed ledger technology).

(2B)

In this section, “digital settlement asset” includes a right to, or interest in, a digital settlement asset.

(2C)

The Treasury may by regulations amend the definition of “digital settlement asset” in subsection (2A).

(3)

In this section—

F4“recognised CSD” has the meaning given by section 285(1) of FSMA 2000;

“recognised clearing house” has the meaning given by section 285(1) of FSMA 2000;

“securities settlement system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument, and which facilitate supplementary and incidental matters.

(4)

The Treasury may by order amend this section so as to—

(a)

add descriptions of systems or arrangements that are not to be regarded as payment systems, or

(b)

vary or remove any such description.