In a coordinated effort, the UK's Financial Conduct Authority (FCA), in collaboration with HM Revenue & Customs and the South West Regional Organised Crime Unit, has launched a crackdown on unlicensed peer-to-peer crypto trading operations. The action, 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 has emphasized that these sites were suspected of facilitating direct crypto transactions between individuals without adhering to the required registration and anti-money laundering controls, which is a legal requirement for crypto exchange providers in the UK.
Currently, no peer-to-peer crypto traders or platforms are registered with the FCA, making these operations illegal and a potential conduit for financial crimes. According to Steve Smart, the FCA's executive director of enforcement and market oversight, 'Unregistered peer-to-peer crypto traders operating in the UK are acting illegally and pose a significant financial crime risk.' This operation is part of a broader effort to disrupt the flow of illicit funds, with law enforcement agencies highlighting the role of unregistered traders in enabling the movement and laundering of illegal money.
Building on previous enforcement actions, including the prosecution of operators of illegal crypto ATMs and the arrest of individuals linked to unregistered crypto exchanges, the FCA is stepping up its oversight. This includes actions against offshore platforms for unlawful financial promotions and the monitoring of social media figures promoting high-risk crypto products. As the UK prepares to introduce a comprehensive regulatory framework for crypto by October 2027, with a licensing window set to open in September 2026, the FCA is urging consumers to verify the registration status of firms using its online register.
It has also warned that dealing with unregistered P2P traders exposes users to risks, including the potential involvement of stolen funds, and lacks the protections offered by the Financial Ombudsman Service or compensation schemes.