Britain's financial watchdog ramped up enforcement against unlicensed cryptocurrency exchanges this month, issuing hundreds of warnings and filing a lawsuit against a major platform. The Financial Conduct Authority targeted firms including Elite Bit Markets, Nexure Gainbit, Plux Crypto, and HTX for operating without proper registration.
The crackdown comes as the UK tries to balance strict consumer protection with positioning itself as a global crypto hub. On the same day warnings intensified, the regulator also lifted its ban on crypto exchange-traded notes for everyday investors.
Major Exchange Faces Court Action
The FCA filed a lawsuit on October 22 against HTX, formerly known as Huobi, in London’s High Court. The regulator accused the exchange of promoting crypto services to UK residents without authorization. HTX has been on the FCA’s warning list since 2023.
The legal filing names Huobi Global and four groups described as “persons unknown” to cover owners, operators, and promotion managers. HTX processes roughly $4.6 billion in daily trading volume and has connections to crypto entrepreneur Justin Sun. The exchange has not publicly responded to the lawsuit.
An FCA spokesperson said the agency has “seen crypto firms react positively to our financial promotions rules and regulations; however, where we still see poor practices, we will not hesitate to take action where firms appear to be breaching our rules.”
The Rules Crypto Firms Must Follow
Since October 2023, crypto companies must register with the FCA under money laundering regulations to advertise or provide services in the UK. The rules require clear risk warnings, a 24-hour waiting period for first-time buyers, and limits on promotional incentives like referral bonuses.
Source: fca.org.uk
The regulator sorts investments into three risk categories. Most cryptocurrencies fall into the middle “Restricted Mass Market Investments” bucket, which allows public marketing but with strict consumer protections. Companies that ignore these rules face potential criminal charges, with penalties up to two years in prison and unlimited fines.
Enforcement Numbers Tell a Mixed Story
The FCA has been aggressive in flagging violations. By August 2024, the watchdog had issued over 1,000 warnings since the promotional rules took effect. These actions led to 48 apps removed from UK app stores.
But the results show a significant compliance gap. Data from a freedom of information request revealed that only 54% of the 1,702 alerts issued between October 2023 and October 2024 resulted in content removal. This means roughly 800 flagged promotions remain online despite warnings.
The regulator has not yet fined any company for failing to remove illegal ads. Instead, enforcement efforts have focused on social media influencers who promote risky schemes. Nine people, including reality TV personalities, face criminal charges.
Opening Doors While Closing Others
The October crackdown happened alongside a major policy shift. On October 8, the FCA lifted a four-year ban on crypto exchange-traded notes for retail investors. These products let people invest in Bitcoin and Ethereum through regulated exchanges without holding the digital assets directly.
David Geale, the FCA’s executive director of payments and digital finance, explained that crypto markets have “become more mainstream and better understood.” About 12% of UK adults—roughly 7 million people—now own cryptocurrency, up from just 4% in 2021.
The UK government published draft legislation in April 2025 aiming to make Britain a “world leader in digital assets.” The FCA is developing rules for stablecoins, trading platforms, and custody services, with full implementation expected in 2026.
What This Means for Crypto Users
UK residents should check if crypto platforms are registered with the FCA before using them. The regulator maintains a public warning list of unauthorized firms. Investments with unlicensed companies lack protection from the Financial Services Compensation Scheme, meaning users likely won’t recover funds if something goes wrong.
The dual approach—cracking down on unlicensed operators while opening regulated pathways—shows the UK’s attempt to protect consumers without stifling innovation. However, the low compliance rate with takedown requests suggests many firms are willing to operate in legal gray areas.
Companies advertising crypto products in the UK must now meet strict standards. Promotions need approval from the FCA or an authorized firm before going live. Ads must display prominent risk warnings and cannot use tactics that push people toward hasty investment decisions.
The Road Gets Tougher
The October 2025 enforcement wave signals that unlicensed crypto operations face growing legal pressure in the UK. The HTX lawsuit marks a significant escalation, showing the regulator is moving beyond warnings to courtroom battles. Yet with nearly half of flagged illegal promotions still operating, questions remain about enforcement effectiveness. The UK’s effort to become a regulated crypto center continues, but the market is still adjusting to rules that took effect just two years ago.
