FCA Leads First Crackdown on Illegal Crypto Trading

WHY THIS MATTERS:The decisive action taken by the FCA in collaboration with law enforcement marks a significant escalation in the UK’s fight against illicit financial activity within the digital assets space. This is a critical development for the wider fintech ecosystem, as regulatory bodies move beyond policy drafting to physical enforcement against unregistered operators. The clear message is that the grace period for bad actors is over, underscoring the shift toward a rigorously compliant environment for crypto. For legitimate firms building innovative digital assets propositions, this regulatory clarity and enforcement capability is a vital mechanism that builds market confidence and protects consumers. The crackdown demonstrates that regulatory compliance is the non-negotiable cost of doing business in the UK’s burgeoning crypto market, ensuring that the country’s financial crime defenses keep pace with technological advancement.

The Financial Conduct Authority (FCA) has carried out its first operation with partners to disrupt illegal peer-to-peer crypto trading across multiple London locations.   

Working with HM Revenue & Customs (HMRC) and the South West Regional Organised Crime Unit (SWROCU), the FCA targeted 8 premises suspected of illegal peer-to-peer crypto trading. The FCA issued cease and desist letters at each site, notifying traders to stop illegal activity immediately. Evidence obtained during the on-site inspections is supporting a number of ongoing criminal investigations.   

Peer-to-peer trading is when individuals buy and sell crypto directly with each other, rather than using a centralised exchange and requires appropriate registration. There are currently no FCA‑registered peer-to-peer crypto traders or platforms operating in the UK.  

Steve Smart, executive director of enforcement and market oversight at the FCA said: “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.”  

DI Ross Flay of SWROCU said: “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 taken action against unregistered cryptoasset activity in the UK, including prosecuting an individual operating an illegal network of crypto ATMs. In June 2024, the FCA worked with the Metropolitan Police Service to arrest 2 individuals suspected of running an illegal cryptoasset exchange.   

The Government’s National Risk Assessment of Money Laundering and Terrorist Financing outlines how cryptoassets are increasingly used to launder the proceeds of crime. The FCA continues to work with domestic and international partners to fight financial crime and protect consumers.   

Consumers can check whether a crypto firm is correctly registered with the FCA using the FCA’s Firm Checker.

FF NEWS TAKE: This targeted operation moves the needle significantly by proving the FCA’s willingness to use its full enforcement muscle, establishing a hard line against non-compliant peer-to-peer activities. We view this as a necessary step to de-risk the UK crypto sector and build long-term institutional trust. Going forward, firms must watch for the FCA’s promised publication of a “Good and Poor Practice report” for AI in financial services, which will further cement governance standards across all nascent technologies.