- Three London premises were raided in the effort by the FCA in the case of peer-to-peer crypto trading without being registered.
- The move is amid the efforts to have a crypto authorization regime in place by 2027.
There has been increased scrutiny of peer-to-peer crypto trading that does not have FCA registration in the United Kingdom. The FCA carried out an investigation on September 10th alongside HM Revenue & Customs and the police. Cease and desist notices were served at all three premises after inspection. The notices ordered the crypto traders to immediately cease any illegal trading of cryptos.
The FCA draws a distinction between personal trading and business crypto trading. An individual can carry out personal crypto trading without FCA registration at the moment. Nevertheless, a business that trades in crypto exchange services has to be registered with the FCA. There are currently no registered peer-to-peer crypto businesses in the country. According to the FCA, unregistered crypto trading can lead to financial crimes as it fails to go through required controls. These controls involve prevention of money laundering.
Inspections Stem from Previous London Efforts
The September raid comes on the heels of an earlier FCA operation, which inspected eight premises in London in April. During that operation, FCA collaborated with HMRC and the South West Regional Organised Crime Unit. Officials handed out cease and desist notices at all premises and collected evidence for further investigation.
The evidence from that operation is used in criminal investigations and enforcement efforts ongoing at present. The inspections were conducted under the 2017 regulations on money laundering in the UK. The FCA has been regulating crypto businesses regarding anti-money laundering compliance since 2020. The FCA has also enforced other illegal crypto operations across the UK.
In 2024, two Londoners were arrested for suspected unregistered crypto exchange. The FCA has prosecuted a manager operating an unregistered crypto ATM network. That network transferred £2.6 million from December 2021 to September 2023. This operator was subsequently sentenced to four years of jail for unregistered crypto operations.
New Crypto Regulations Provide Broader Regulatory Regime
The crackdown is being conducted in the weeks before the FCA begins accepting applications under its new crypto regime. Applications will be accepted from September 30, 2026, to February 28, 2027. The new regime will come into force from October 25, 2027.
The new regime will mean that further crypto activities are subject to FCA authorization requirements. These include crypto trading platforms, crypto custody, dealing, issuance of stablecoins and staking arrangements. Registration under the current MLRs will not guarantee authorization under the new regime. In the meantime, businesses should ensure compliance with any relevant anti-money laundering and financial promotion obligations.
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