In a coordinated effort, the UK's Financial Conduct Authority (FCA) has launched a crackdown on unauthorized peer-to-peer cryptocurrency trading, targeting eight locations in London. The operation, conducted in conjunction with His Majesty's Revenue & Customs (HMRC) and the South West Regional Organised Crime Unit (SWROCU), resulted in the issuance of cease-and-desist notices and the collection of evidence for ongoing criminal investigations. The FCA alleged that these sites facilitated direct cryptocurrency transactions between individuals without adhering to necessary registration requirements or implementing anti-money laundering controls.
Under UK law, cryptocurrency exchange providers must register with the FCA, and currently, no peer-to-peer cryptocurrency traders or platforms are registered in the country. According to Steve Smart, the FCA's executive director of enforcement and market oversight, unregistered peer-to-peer cryptocurrency traders operating in the UK are acting illegally and pose a risk of financial crime. Law enforcement views this operation as part of a broader effort to disrupt the flow of illicit funds, with DI Ross Flay of SWROCU noting that unregistered traders can enable criminals to launder and spend illegal money.
This action follows previous enforcement measures, including the prosecution of operators of illegal cryptocurrency ATMs and the arrest of individuals linked to an unregistered cryptocurrency exchange in 2024. The FCA also took action against the offshore platform HTX for unlawful financial promotions and expanded its oversight of social media figures promoting high-risk cryptocurrency products.
As the UK prepares to introduce a comprehensive regulatory framework for cryptocurrencies by October 2027, with a licensing window expected to open in September 2026, the FCA is urging consumers to verify the registration status of firms using its online register and warning of the risks associated with dealing with unregistered traders, including the lack of access to the Financial Ombudsman Service or compensation schemes and the potential involvement of stolen funds in transactions.