The United Kingdom’s Financial Conduct Authority (FCA) has executed its first coordinated operation targeting unregistered peer-to-peer (P2P) cryptocurrency trading. The operation involved inspections at eight locations across London suspected of facilitating illegal P2P crypto activities. This action was conducted in collaboration with HM Revenue & Customs and the South West Regional Organised Crime Unit.
Key Takeaways
- The FCA conducted its inaugural coordinated operation against illegal P2P crypto trading, inspecting multiple London sites.
- This move signifies the FCA’s intent to broaden its enforcement scope ahead of the full implementation of the UK’s crypto regulatory framework.
- No entities are currently registered with the FCA for peer-to-peer crypto trading operations in the UK.
- Unregistered P2P crypto trading is deemed illegal and poses risks related to financial crime and illicit fund movement.
- The FCA continues to work with partner agencies to disrupt unregistered crypto asset activities.
During the inspections, cease-and-desist letters were issued, and evidence gathered is now supporting ongoing criminal investigations. The FCA clarified that while P2P crypto trading, where individuals transact directly, requires appropriate registration, no such entities are currently authorized to operate within the UK. Steve Smart, the FCA’s executive director of enforcement and market oversight, emphasized that unregistered P2P crypto traders are operating unlawfully and present a financial crime risk, with the agency committed to disrupting such activities.
Law enforcement officials echoed these concerns. Detective Inspector Ross Flay of SWROCU highlighted that unregistered P2P traders can serve as conduits for criminals to launder and move illicit funds. This action aligns with the FCA’s prior enforcement efforts, which include prosecuting an individual for operating an illegal crypto ATM network and arresting two individuals for suspected involvement in an illegal crypto exchange.
Thomas Cattee, a white-collar crime partner at Gherson Solicitors LLP, commented that this latest operation demonstrates the FCA’s proactive approach to enforcement, irrespective of the impending comprehensive crypto regulatory regime. He stated that the FCA is prepared, in conjunction with other agencies, to pursue individuals allegedly engaged in unregistered P2P crypto trading, showcasing a continued willingness to address unregistered crypto-asset activity.
Potential Regulatory Precedent and the UK Crypto Regime
The UK’s broader regulatory framework for crypto assets is still under development, with the full regime anticipated by October 2027. However, certain crypto-related activities already mandate FCA registration, particularly for anti-money laundering (AML) compliance. The FCA itself has reiterated that crypto assets remain high-risk investments and are largely unregulated in the UK, with exceptions for AML and financial promotion rules.
This operation sets a precedent for the FCA’s enforcement strategy by demonstrating its willingness to act against unregistered activities even before the full regulatory framework is in place. It signals that the regulator will actively police activities that fall outside existing registration requirements, emphasizing compliance with current laws as a prerequisite for operating within the UK’s financial ecosystem. This proactive stance indicates that firms and individuals involved in crypto, regardless of the evolving regulatory landscape, must ensure adherence to existing legal obligations to avoid enforcement actions.
In parallel, regulatory bodies are preparing for an expanded supervisory role. The FCA is working towards a September 2026 opening for its licensing gateway and is conducting consultations on crypto rules in anticipation of the 2027 rollout. New registrations for crypto firms, such as Blockchain.com, are also being processed, indicating progress toward a more structured regulatory environment.
Information compiled from materials : www.theblock.co