Britain’s Financial Conduct Authority, working with HM Revenue and Customs and the Metropolitan Police, visited three London premises on September 10 and ordered the traders inside to stop operating unregistered peer-to-peer crypto businesses. The regulator published details of the operation on Wednesday, and the message it attached was blunt: nobody running this kind of business in the UK is registered, which means all of it is illegal.
Cease and desist letters were issued at all three locations. The FCA said anyone buying and selling crypto directly with other people as a business needs registration under the money laundering regulations, and pointed out that no peer-to-peer crypto business currently holds that registration anywhere in the United Kingdom. Every commercial P2P venue in the country is, by definition, operating outside the law.
Steve Smart, the FCA’s executive director of enforcement and market oversight, put the warning in plain terms. “Working with partners, we continue to track and disrupt illegal crypto activity,” he said. “Anyone running an unregistered peer-to-peer crypto business should assume we are looking at them.”
The Metropolitan Police sent Detective Sergeant Sathish Alalasundaram to the announcement. “Law enforcement and partner agencies are working significantly hard to tackle criminal activity involving digital assets,” he said. “The complex nature of cryptocurrency, combined with the speed at which funds can be moved across jurisdictions, presents ongoing challenges for those investigating.” He added that the force keeps adapting its tactics as criminals change methods.
Why the regulator cares about P2P
Peer-to-peer trading means individuals exchange crypto directly, often cash for tokens, without going through an exchange. Done as a business, it falls squarely inside the UK’s anti-money laundering regime. Operators outside that regime skip the identity checks and transaction monitoring designed to catch dirty money, which is why the FCA describes unregistered venues as a route for criminals to move and launder illicit funds.
The scale problem is structural. A single P2P trader handling dozens of counterparties a week can move more value than a small exchange branch, with no records filed anywhere. When police trace stolen funds on-chain, the trail often ends at a P2P cash handoff, which is exactly the gap the registration requirement is meant to close. The FCA has made this argument before: it prosecuted the operator of an unlawful crypto ATM network, where machines were being used to convert criminal cash into tokens with no checks, and supported the arrest of two people suspected of running an illegal exchange.
Wednesday’s disclosure was the second coordinated sweep in six months. In April, the FCA took action against similar P2P operations, and evidence gathered then is now feeding criminal investigations. The regulator treats each operation as part of a running campaign rather than a one-off, and the repeat format, multi-agency visits plus publicized letters, is designed to reach every operator watching the news rather than only the three premises involved.
There is also a signal in the choice of partners. HMRC brings tax enforcement powers, since unregistered P2P income is almost always undeclared. The Met brings the ability to make arrests rather than issue letters. Combining the three agencies in one operation lets each pursue the part of the case it is best equipped for, and it raises the cost of ignoring a cease and desist letter considerably.
Enforcement now, authorization soon
The timing is not accidental. The FCA’s new cryptoasset regime takes effect on October 25, 2027, and the application window opens on September 30. Firms will have until February 28, 2027 to apply for authorization covering trading, custody, intermediation, staking and qualifying stablecoin issuance. Existing money laundering registrations will not roll over automatically; every firm will need to file under the new system.
The FCA published its final rules and guidance on June 30, covering prudential standards, conduct requirements and market integrity rules alongside bespoke provisions for stablecoin issuers. The Bank of England will jointly oversee issuers deemed systemic. Consumer Duty obligations will apply to regulated crypto activities, with limited exemptions for trading between participants on UK platforms. A separate consultation on letting certain funds put up to 10% of assets into crypto exchange-traded notes is also open.
Legal experts quoted by CoinDesk noted the uncomfortable gap: because zero P2P firms hold authorization, enforcement under existing money laundering rules is filling the space while the wider framework is still more than a year away. The FCA’s position is that it will not wait for the new regime to act against businesses breaking current law.
For legitimate crypto businesses, the message cuts the other way. The FCA has opened pre-application support through its PASS service, scheduled webinars through late September and published guidance on which activities fall inside the perimeter. Firms that apply early and submit complete applications are expected to face smoother assessments. The regulator has warned that poor quality or late applications risk refusal, which would leave firms unable to continue crypto activities once the regime starts. Application fees and the depth of documentation required, from governance arrangements to wind-down plans, mean smaller firms are already weighing whether the UK market is worth the compliance bill.
The contrast between the two tracks is stark. On one side, an authorization process designed to bring exchanges, custodians and stablecoin issuers into full FCA supervision by late 2027. On the other, multi-agency raids on traders who never registered at all. The FCA is running both at once, and Wednesday’s announcement makes clear neither track is slowing down. Operators who took the April sweep as a warning now have a second data point, and the FCA has promised the campaign continues.