The UK’s financial watchdog has carried out its first-ever crackdown on illegal crypto trading, ordering eight traders to cease operations immediately.
The Financial Conduct Authority (FCA) announced on Wednesday 22 April that it had carried out an operation to crack down on illegal peer-to-peer crypto trading in conjunction with HMRC and the South West Regional Organised Crime Unit.
This operation saw the financial watchdog issue cease and desist letters at eight different premises, notifying traders to stop illegal activity immediately.
Trading crypto is legal in the UK, even when trading on a decentralised platform, provided users go through a regulated exchange that is appropriately registered.
Peer-to-peer crypto trading
Peer-to-peer trading occurs when people buy and sell crypto directly with each other, with no intermediaries involved.
This decentralised, peer-to-peer transfer of value was one of the founding principles of Bitcoin and the cypherpunk movement that birthed it, with the Bitcoin whitepaper describing the token as “peer-to-peer electronic cash”.
Under this model, people could exchange funds directly with one another digitally, without needing a bank or payment provider to facilitate their transaction.
Many cryptocurrency advocates liken peer-to-peer transactions to the exchange of cash, and they often make similar comparisons when supporting exchanges and trading platforms that offer consumer-facing trading services without involving a centralised intermediary.
Currently, there are no peer-to-peer crypto traders or platforms registered with the FCA to operate in the UK. Any peer-to-peer crypto traders currently operating in the UK are therefore doing so illegally and have now been targeted by the FCA.
“Unregistered peer-to-peer crypto traders operating in the UK are doing so illegally and pose a financial crime risk,” said FCA executive director of enforcement and market oversight Steve Smart.
“We will use our powers and work with partners to disrupt them.”
“Consumers should protect themselves by only dealing with firms registered with the FCA and by remembering that crypto remains a high risk investment,” he said.
The FCA noted that this action against illegal peer-to-peer crypto traders was taken under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.
It added that cryptoassets are increasingly being used to launder money involved in crime and said it would continue to work with partners to protect consumers and fight financial crime.
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