In a significant operation, the UK's Financial Conduct Authority (FCA), in conjunction with HM Revenue & Customs and the South West Regional Organised Crime Unit, has conducted a series of raids on eight locations in London suspected of hosting unlicensed peer-to-peer crypto trading activities. The sites in question were found to be operating without the necessary registration or anti-money laundering controls, thereby contravening UK law and posing a significant risk of financial crime. As part of the operation, officials issued cease-and-desist orders and collected evidence that will inform ongoing criminal investigations.
The FCA has emphasized that under current UK legislation, all crypto exchange providers are required to register with the authority, yet presently, there are no registered peer-to-peer crypto traders or platforms in the country. According to Steve Smart, the FCA's Executive Director of Enforcement and Market Oversight, unregistered peer-to-peer crypto traders are operating illegally and pose a significant financial crime risk. Law enforcement views this operation as a critical step in disrupting the flow of illicit funds. DI Ross Flay of SWROCU noted that unregistered traders can inadvertently enable criminals to launder and spend illegal proceeds.
This enforcement action builds upon previous efforts, including the prosecution of operators of illegal crypto ATMs and the arrest of individuals connected to an unregistered crypto exchange in 2024. The FCA also took action against the offshore platform HTX for making unlawful financial promotions and expanded its oversight of social media influencers promoting high-risk crypto products. The crackdown is timely, given the UK's plans to introduce a comprehensive regulatory framework for crypto by October 2027, with a licensing window set to open in September 2026. The current regulatory framework primarily focuses on anti-money laundering compliance and financial promotions.
The FCA has urged consumers to verify the registration status of firms using its online register and warned that dealing with unregistered P2P traders exposes users to significant risks, including the potential involvement of stolen funds and the lack of access to the Financial Ombudsman Service or compensation schemes.