In a significant move to curb illicit activities, the UK's Financial Conduct Authority (FCA), in collaboration with His Majesty's Revenue & Customs (HMRC) and the South West Regional Organised Crime Unit (SWROCU), has conducted a series of raids on eight locations in London suspected of operating illegal peer-to-peer (P2P) cryptocurrency trading platforms. These sites were accused of facilitating direct crypto transactions between individuals without adhering to the necessary registration requirements or implementing anti-money laundering measures, thereby posing a significant risk of financial crime.
The FCA requires all crypto exchange providers to register, yet currently, there are no registered P2P crypto traders or platforms in the UK. The operation involved issuing cease-and-desist orders and gathering evidence for ongoing criminal investigations.
According to Steve Smart, the FCA's executive director of enforcement and market oversight, unregistered P2P crypto traders are operating illegally and increase the risk of financial crime. Law enforcement views this operation as a crucial step in disrupting the flow of illicit funds, with DI Ross Flay of SWROCU highlighting that unregistered traders can inadvertently aid criminals in laundering money. This crackdown is part of a broader effort by the FCA to enforce regulations, having previously prosecuted operators of illegal crypto ATMs and worked with police to apprehend individuals linked to unregistered crypto exchanges.
The action precedes the UK's planned introduction of a comprehensive regulatory framework for crypto by October 2027, with a licensing window set to open in September 2026. The FCA is advising consumers to verify the registration status of firms using its online register and warning of the risks associated with dealing with unregistered entities, including lack of access to the Financial Ombudsman Service or compensation schemes and potential involvement with stolen funds.