City watchdog targets London crypto traders in latest clampdown

The City watchdog has targeted three London premises suspected of illegal peer-to-peer crypto trading as it increases its scrutiny of digital assets.

In a joint operation with HMRC and the Metropolitan Police, the Financial Conduct Authority (FCA) said on Thursday it had issued three cease-and-desist letters to individuals trading through UK businesses, ordering them to stop the alleged “illegal” activity.

Peer-to-peer trading lets individuals buy and sell crypto directly with each other, bypassing centralised exchanges. No peer-to-peer crypto traders are currently FCA-registered in the UK.

Authorities ‌said ⁠unregistered peer-to-peer crypto traders can be used to move and launder illicit funds.

This comes as authorities estimated that more than £100bn is laundered through the UK corporate structures each year.

In April, the FCA led its first formal crackdown on eight London premises suspected of peer-to-peer crypto trading. Evidence gathered during that operation has since supported several criminal investigations.

Steve Smart, the FCA’s executive director of enforcement and market oversight, said the regulator continues “to track and disrupt illegal crypto trading.”

Detective sergeant Sathish Alalasundaram at the Metropolitan Police Service said the force continues “to evolve and adapt investigative capabilities and disruption tactics to bring those who break the law to justice.”

The watchdog’s regime change

The FCA had previously drawn criticism for U-turning on its four-year ban on investors holding regulated crypto products last year.

However, the latest cease-and-desist letters come as the FCA moves to tighten regulation of the UK’s cryptoasset regime under “landmark rules” first announced in June.

In a briefing on Wednesday, the watchdog outlined new guidance stating that from October 2027, firms will need FCA approval to deal with British customers. Under current rules, crypto firms need only register with the regulator for anti-money laundering checks.

Keith Grose, UK chief executive of Coinbase, the world’s largest public crypto platform, told City AM last month that the new rules will “wipe out” firms unwilling to comply and raise consumer trust.

YouGov research commissioned by the FCA in December found that 25 per cent of cryptoasset users would be more likely to invest if crypto were better regulated in the UK. Roughly 8 per cent of UK adults currently hold cryptocurrency.

The crackdown on illicit crypto finance has also become a flagship government policy. On Tuesday, the Home Office announced its anti-money laundering and asset recovery strategy, which includes 500 new officers to track dirty money, disrupt organised crime networks and seize criminal assets. Backed by £500m of investment, the recruits will be spread across the police force, the National Crime Agency and the Crown Prosecution Service.