The U.K.’s Financial Conduct Authority (FCA) has issued a warning over cryptocurrency derivatives exchange BitMEX.

In a notice posted Tuesday, the independent financial regulator said the exchange has been targeting British residents without its consent or approval.

“Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorized by us,” the watchdog said.

The FCA said it holds information indicating that BitMEX was conducting regulated activities that required its authorization.

As part of its normal activities, the financial regulator does flag entities it perceives as unlawful or suspicious, or cryptocurrency products, such as derivatives, it deems high risk for consumers. In fact, the authority said in 2018 that companies offering crypto derivatives likely need to be authorized because such products may be financial instruments under current directives.

A limited ban on selling crypto derivatives like exchange-traded notes is also planned by the regulator, which said such products are “ill-suited” to retail investors “who cannot reliably assess the value and risks of derivatives or ETNs that reference certain crypto assets.”

“We are working closely with our advisors to assess the situation. There is nothing more we can add at this time,” BitMEX told CoinDesk.

In what appears to be a slip-up, the FCA also issued a warning over popular crypto exchange Kraken on Tuesday. However, the notice has since been removed, with Decrypt news editor Tim Copeland tweeting that the warning had been issued after the FCA confused the legitimate Kraken service with scammers purporting to be the exchange.

In January, BCB Group, a company that provides financial services to the likes of Coinbase, Bitstamp and Galaxy Digital, was awarded a payments license by the FCA. The firm’s CEO, Oliver von Landsberg-Sadie told CoinDesk that conditions in the U.K were such that many crypto-to-crypto exchanges were light on meeting regulatory obligations, mainly since no fiat currency changes hands.

He said the watchdog’s concerns become more severe depending on the type of financial product on offer, with derivatives being at the top of the list as they present the greatest risk to consumers.

“This statement by the FCA is one which fulfills one of its 3 core objectives – keep markets efficient, provide a framework to raise capital, and protect consumers. Few would argue against stricter controls on access to this kind of product,” Landsberg-Sadie said.

The FCA had not replied to CoinDesk’s request for comment by press time.

Update (09:25 UTC, March 5, 2020): Added comment from BitMEX.

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