FCA leads first crackdown on illegal P2P crypto trading
The Financial Conduct Authority has carried out its first operation with partners to disrupt illegal peer-to-peer crypto trading across multiple London locations. Cease and desist letters were issued at 8 premises, supporting ongoing criminal investigations.
Disrupting illicit crypto operations
The Financial Conduct Authority, in collaboration with HM Revenue & Customs and the South West Regional Organised Crime Unit, executed its inaugural operation targeting illegal peer-to-peer (P2P) crypto trading.
The coordinated effort involved inspections at eight premises across London, where cease and desist letters were issued to traders, instructing them to immediately halt their illicit activities.
Evidence gathered during these on-site visits is now being used to support several ongoing criminal investigations.
Peer-to-peer trading, which involves individuals directly buying and selling crypto without a centralised exchange, requires appropriate registration in the UK.
Currently, no FCA-registered P2P crypto traders or platforms operate legally within the country.
Steve Smart, executive director of enforcement at the FCA, stated that unregistered P2P traders are operating illegally and pose a significant financial crime risk, vowing to disrupt them with partners.
DI Ross Flay of SWROCU added that these operations aim to prevent criminals from using such routes to move, disguise, and spend illegal money.
Broader fight against financial crime
This operation builds on the FCA's prior enforcement against unregistered cryptoasset activities, including prosecuting an individual for illegal crypto ATMs and arresting two for an illegal exchange in June 2024.
These actions reflect the Government's National Risk Assessment, which notes cryptoassets are increasingly used for money laundering.
The FCA emphasizes its ongoing collaboration with domestic and international partners to fight financial crime and protect consumers.
It advises consumers to verify firms via the FCA's Firm Checker and remember that crypto is a high-risk investment, largely unregulated in the UK except for anti-money laundering and financial promotion.
Cracking down on the Wild West
This initial operation signals the FCA's active pursuit of illegal crypto activities, moving beyond warnings to direct enforcement.
The absence of registered P2P traders, however, highlights a significant regulatory vacuum and the scale of the challenge in safeguarding consumers.
While a positive step, sustained enforcement and clearer regulation are crucial to effectively mitigate financial crime risks in the evolving digital asset landscape.