The latest FCA crypto crackdown has seen Britain’s financial watchdog move against three London premises suspected of operating illegal peer-to-peer cryptocurrency trading businesses, in a joint operation carried out with tax inspectors and the Metropolitan Police.
The Financial Conduct Authority (FCA) announced on Thursday that it had issued cease-and-desist letters at each of the three locations, ordering traders to stop participating in illegal crypto businesses immediately. The regulator did not identify the premises.
The operation was conducted alongside HM Revenue and Customs (HMRC) and London’s Metropolitan Police, and the watchdog said evidence obtained during the on-site inspections is supporting a number of ongoing criminal investigations.
Why the FCA crypto crackdown matters
Peer-to-peer trading happens when individuals buy and sell crypto directly with each other, rather than through a centralised exchange. Anyone carrying out that activity “by way of business” in the UK is required to hold the appropriate registration with the FCA — without it, the activity is illegal.
“There are currently no FCA-registered peer-to-peer crypto businesses operating in the UK,” the regulator said. “By operating outside the FCA’s registration regime, they avoid controls designed to detect and prevent money laundering.”
The government’s National Risk Assessment of Money Laundering and Terrorist Financing has outlined how cryptoassets are increasingly being used to launder the proceeds of crime, and the watchdog has repeatedly warned that crypto remains a high-risk investment that is largely unregulated in Britain outside of anti-money laundering and financial promotion rules.
‘Light-touch’ era coming to an end, lawyers say
The move is the FCA’s second coordinated enforcement operation against unregistered peer-to-peer traders in six months, and lawyers say it signals a hardening of the regulator’s approach as the UK’s full cryptoasset framework edges closer.
“The era of ‘light-touch’ crypto regulation in the UK is ending,” said Caroline Black, a consultant at Gherson Solicitors. “This second coordinated enforcement operation in six months confirms the FCA’s shift from warnings to active disruption of unregistered P2P crypto businesses, with criminal liability a live risk for any operator trading by way of business without the proper registration.”
Aditya Mittal, managing principal at the consultancy Capco, said firms should be paying close attention to guidance issued by the FCA earlier this week clarifying how the regulatory perimeter of the UK’s incoming cryptoasset regime will apply. “Following the guidance from the FCA earlier this week, which clarified how the regulatory perimeter of the UK’s incoming cryptoasset regime will apply, firms should prioritize understanding which parts of their business fall within scope,” he said.
The guidance covers activities including issuing qualifying stablecoins, operating crypto exchanges, dealing and coordinating deals, safeguarding digital assets and staking. Firms will be able to apply for FCA approval between 30 September 2026 and 28 February 2027, and the full UK crypto regulatory framework takes effect on 25 October 2027.
Second London operation in six months
Thursday’s action follows the FCA’s first crackdown in April, when it worked with HMRC and the South West Regional Organised Crime Unit to target eight premises across London suspected of illegal peer-to-peer crypto trading, also issuing cease-and-desist letters at each site.
Steve Smart, the FCA’s executive director of enforcement and market oversight, said at the time: “Unregistered peer-to-peer crypto traders operating in the UK are doing so illegally and pose a financial crime risk. We will use our powers and work with partners to disrupt them.”
“Consumers should protect themselves by only dealing with firms registered with the FCA and by remembering that crypto remains a high risk investment.”
Detective Inspector Ross Flay of the South West Regional Organised Crime Unit added: “By working with our colleagues at the FCA and HMRC we are able to effectively target and disrupt unregistered peer-to-peer crypto traders operating illegally. As law enforcement, we want to stop these traders providing a route for criminals to move, disguise and spend illegal money.”
The FCA has previously prosecuted an individual for operating an illegal network of crypto ATMs in the UK, and in June 2024 it worked with the Metropolitan Police to arrest two people suspected of running an illegal cryptoasset exchange.
Thursday’s operation is still developing: the regulator has not said whether arrests followed the latest visits, but confirmed that evidence gathered is feeding into ongoing criminal investigations. Anyone dealing in crypto can check whether a firm is correctly registered using the FCA’s Firm Checker.
