The UK’s Financial Conduct Authority has targeted three London premises suspected of operating illegal peer-to-peer cryptocurrency trading businesses, extending a physical enforcement campaign against unregistered crypto operators as the country prepares for a much broader regulatory regime.
The FCA said on Sept. 17 that the operation was carried out on Sept. 10 alongside HM Revenue & Customs and the Metropolitan Police Service.
Cease-and-desist letters were issued at all three locations, requiring traders to stop any suspected illegal crypto business activity.
The FCA did not identify the premises, businesses or individuals involved, and the action should not be interpreted as a finding that criminal offences have been proven.
The regulator’s concern centers on registration under the UK’s anti-money-laundering framework.
Anyone providing certain crypto exchange services by way of business in the UK must register with the FCA under the Money Laundering Regulations before beginning operations. That requirement includes businesses arranging peer-to-peer exchanges between cryptoassets and money or between different cryptoassets.
Personal P2P trading is different. The FCA clarified after its previous enforcement operation that individuals buying and selling crypto on their own behalf do not need registration simply because a transaction is peer to peer.
The legal trigger is carrying out the activity as a business.
The FCA says there are currently no registered peer-to-peer crypto trading businesses operating in the UK.
Steve Smart, the regulator’s executive director of enforcement and market oversight, warned that operators running unregistered P2P businesses should assume the FCA is looking at them.
The regulator views the sector primarily through a financial-crime lens. Cash-heavy or lightly intermediated P2P trading can potentially allow funds to move between bank accounts, cash and digital assets without the customer checks normally applied by regulated exchanges.
That concern reflects a broader push across crypto markets to identify illicit crypto activity before funds are dispersed across exchanges, wallets and multiple blockchains.
Second London P2P Operation in Five Months
The Sept. 10 action follows the FCA’s first dedicated crackdown on illegal P2P crypto trading in April.
That operation targeted eight London premises in cooperation with HMRC and the South West Regional Organised Crime Unit. Cease-and-desist letters were issued at each location, and the FCA said evidence gathered during the inspections was supporting several ongoing criminal investigations.
The regulator has increasingly moved beyond website warnings and into physical enforcement against unregistered crypto businesses.
In June 2024, the FCA and Metropolitan Police arrested two people suspected of operating an illegal crypto exchange through which more than £1 billion of unregistered cryptoassets were believed to have been bought and sold.
The FCA also secured the UK’s first criminal sentence for unregistered crypto activity in 2025. Olumide Osunkoya was sentenced to four years in prison after operating a network of crypto ATMs despite an earlier FCA registration refusal. The network processed more than £2.5 million in crypto transactions.
Those cases show why AML compliance has become an increasingly important operational issue for crypto trading businesses globally rather than simply a documentation requirement.
Registered exchanges typically have to conduct customer identification, transaction monitoring and, where necessary, enhanced due diligence or source-of-funds checks.
Blockchain-monitoring systems can also screen destination wallets for sanctions exposure, fraud links and other high-risk addresses.
The tension is that increasingly aggressive controls can also generate false positives or lengthy reviews for legitimate customers. Exchanges have faced complaints ranging from extended compliance holds to repeated identity-verification problems.
The FCA’s latest action addresses the opposite problem: businesses allegedly operating outside that compliance perimeter altogether.
UK Crypto Regulation Is About to Become Much Broader
The timing is particularly significant because the UK’s crypto regime is approaching a major transition.
At present, the FCA’s direct oversight of much ordinary crypto activity remains concentrated around anti-money-laundering requirements and financial promotions.
That changes under the Financial Services and Markets Act 2000 Cryptoassets Regulations 2026.
From Oct. 25, 2027, a broader group of crypto activities carried on by way of business in the UK will require FCA authorisation. The future perimeter covers areas including crypto trading platforms, dealing and arranging transactions, custody, staking and qualifying stablecoins.
The authorisation application window opens Sept. 30, 2026.
That means the FCA is tightening enforcement against businesses operating outside today’s AML gateway at almost the same time it starts processing firms seeking access to tomorrow’s broader regulatory system.
Crypto firms are increasingly being pushed toward formal regulated financial infrastructure, whether through exchange licences, banking frameworks or dedicated digital-asset authorisations.
The Bigger Risk Is for Informal OTC Desks Hiding Behind the P2P Label
The important distinction in this crackdown is that the FCA is not trying to prohibit two people from privately swapping Bitcoin.
It is targeting something much closer to an informal exchange business.
That matters because “P2P” can describe very different things.
At one end is a person occasionally selling crypto directly to another person.
At the other is an operator maintaining premises, regularly matching buyers and sellers, taking commissions, handling repeated cash or bank transfers and effectively functioning as an OTC crypto desk.
Calling the second model peer to peer does not necessarily remove it from financial regulation.
That appears to be the enforcement message the FCA is trying to establish.
For centralized exchanges offering UK-facing P2P marketplaces, the development is also worth watching closely. A platform may not physically handle every fiat payment between users, but facilitating repeated commercial crypto exchange activity can still create AML, customer-verification and transaction-monitoring obligations depending on how the service is structured.
The same applies to independent OTC traders who rely on Telegram, WhatsApp or physical locations instead of a conventional exchange interface.
The technology does not determine the regulatory risk.
The business activity does.
There is also a competitive angle.
Registered crypto firms spend substantial amounts on compliance teams, blockchain analytics, sanctions screening, KYC infrastructure and suspicious-activity monitoring. An unregistered desk can potentially avoid those costs while competing for exactly the same customer flow.
Enforcement therefore does more than address money laundering. It removes a regulatory arbitrage opportunity between businesses operating inside the compliance perimeter and those operating outside it.
The September operation suggests the FCA now considers physical P2P trading locations an enforcement priority rather than an edge case.
Three sites on their own are small.
But combined with eight premises in April, the £1 billion suspected exchange investigation, crypto ATM seizures and the UK’s first prison sentence for unregistered crypto activity, the pattern is becoming difficult to miss.
The FCA is moving from telling crypto businesses that registration is required to actively looking for operators that ignored the requirement.
And with the UK’s full crypto authorisation regime now approaching, informal P2P and OTC businesses may have less room than ever to assume they can remain outside the regulatory perimeter simply because their trades happen directly between users.
Johan Shamshad is a financial markets writer at Dave Finances covering cryptocurrencies, trading platforms, brokers, fintech, financial regulation, and developments across global markets. He previously worked at Gulf News, adding newsroom experience to his coverage of fast-moving financial and digital-asset markets.
His work focuses on identifying market-moving events, company developments, regulatory changes, product launches, and shifts in trading and financial infrastructure.
Johan contributes news and analysis designed to help readers understand not only what happened, but why a development matters and how it may affect the wider financial landscape.