FCA Leads First Coordinated Crackdown on Illegal Peer-to-Peer Crypto Trading
Credit: Money Magpie
Eight London premises were raided alongside HMRC and SWROCU; cease-and-desist letters were served, and criminal investigations were opened.
Context:
On 22 April 2026, the FCA carried out its first coordinated enforcement operation against illegal peer-to-peer (P2P) crypto trading, targeting eight premises across London in a joint action with HM Revenue & Customs (HMRC) and the South West Regional Organised Crime Unit (SWROCU). Cease-and-desist letters were issued at each site, ordering traders to stop their illegal activity immediately. Evidence gathered during the inspections is supporting several ongoing criminal investigations.
Peer-to-peer crypto trading, where individuals buy and sell digital assets directly with one another rather than through a centralised exchange, requires FCA registration in the UK. There are currently no FCA-registered peer-to-peer crypto traders or platforms operating legally in the UK. Any such activity is therefore unlawful and constitutes a breach of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
The action follows earlier enforcement steps, including prosecutions against illegal crypto ATM operators and a 2026 action against offshore platform HTX for unlawful financial promotions. The crackdown comes as the UK prepares to implement a comprehensive FSMA-based crypto regulatory regime by October 2027, with the FCA authorisation gateway opening in September 2026.
Rules and Guidelines:
Under the MLRs, any business carrying on activity as a crypto-asset exchange provider or custodian wallet provider must register with the FCA. P2P crypto trading platforms and individual traders operating at a commercial scale are within the scope of the registration requirement. Operating without registration is a criminal offence.
The FCA's Steve Smart (executive director of enforcement and market oversight) stated explicitly that unregistered P2P traders are operating illegally and pose a financial crime risk, particularly money laundering risk, as P2P platforms can provide a route for criminals to move, disguise, and spend illicit funds. Law enforcement partners confirmed P2P trading services can enable conversion of criminally obtained funds into crypto and vice versa.
From October 2027, the broader FSMA crypto regime will regulate trading platforms, intermediaries, staking, safeguarding, and other activities. The FCA's perimeter guidance consultation (CP26/13) is currently open (closes 3 June 2026) and sets out which activities require authorisation under the new regime.
Businesses Affected:
Any individual or business providing P2P crypto matching, facilitation, or brokering services, whether online, via messaging apps, or in person, who is not FCA-registered under the MLRs.
Registered crypto exchanges and platforms should note the escalating enforcement posture and ensure their own financial crime controls and AML frameworks are robust.
Banks and financial institutions processing transactions for crypto-related counterparties face enhanced due diligence obligations where P2P crypto activity is identified.
Next Steps:
If you are facilitating P2P crypto transactions commercially and are not FCA-registered under the MLRs, cease activity immediately. Operating without registration is a criminal offence.
Check the FCA Financial Services Register before engaging with any crypto firm. The FCA has directed consumers to use the Firm Checker tool
Review financial crime controls for crypto exposure. Banks, exchanges, and payment firms should ensure transaction monitoring rules flag patterns consistent with unregistered P2P activity.
Monitor the FCA's September 2026 authorisation gateway opening. Any firm intending to operate under the FSMA crypto regime must apply for authorisation during the 12-month application window before October 2027.
Source | FCA | Crypto and Financial Crime
