In a major coordinated effort, the UK's Financial Conduct Authority, in collaboration with HM Revenue & Customs and the South West Regional Organised Crime Unit, has launched a crackdown on unauthorized peer-to-peer cryptocurrency trading platforms. The operation, which targeted eight sites across London, resulted in the issuance of cease-and-desist notices and the collection of evidence for ongoing criminal investigations. The FCA asserts that these platforms, which facilitate direct cryptocurrency transactions between individuals, operate without the necessary registration or anti-money laundering measures. Under UK law, crypto exchange providers are required to register with the FCA, and currently, 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 agencies view this operation as part of a broader effort to disrupt the flow of illicit funds. DI Ross Flay of SWROCU noted that unregistered traders can enable criminals to launder and spend illegal proceeds. This action builds upon previous enforcement measures, including the prosecution of operators of illegal crypto ATMs and the arrest of individuals linked to an unregistered crypto 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 crypto products. As the UK prepares to implement a comprehensive regulatory regime for crypto by October 2027, with a licensing window expected to open in September 2026, the current framework focuses primarily on anti-money laundering compliance and financial promotions.
The FCA advises consumers to verify the registration status of firms using its online register and warns that dealing with unregistered P2P traders may result in a lack of access to the Financial Ombudsman Service or compensation schemes, as well as potential risks associated with stolen funds.