(Bloomberg) -- Japan's securities regulator is planning to warn Binance, one of the world's largest cryptocurrency exchanges, to stop operating in the country without a license, a person familiar with the matter said.
Binance has several staff in the country and has been expanding operations without receiving permission from regulators, said the person, who asked not to be identified because the information is private.
In January, Binance told Bloomberg News it was working to receive an exchange license in Japan. A warning from the country's Financial Services Agency could complicate those efforts.
Governments around the world have been stepping up scrutiny of cryptocurrency exchanges in recent months amid concerns ranging from money laundering to tax evasion to fraud. Japan, one of the most active markets for cryptocurrencies globally, introduced a licensing system for the venues last year.
Read more: What the World's Governments Are Saying About Cryptocurrencies
Binance didn't immediately respond to requests for comment on the FSA's plans, which were first reported by Nikkei. Bitcoin, the world's biggest cryptocurrency by market value, dropped 1 percent at 5:57 p.m. in Hong Kong.
Japan enacted a law in April 2017 that gave the FSA legal authority to regulate and license cryptocurrency exchanges. To date, 16 have received licenses, including bitFlyer Inc. and Quoine. Another 16 were given permission to operate without a license, including Coincheck Inc., which suffered a $500 million hack in January.
In the wake of the Coincheck theft, the FSA has been stepping up scrutiny of cryptocurrency exchanges operating in the country. Last month it issued an administrative penalty against Macau-based Blockchain Laboratory Ltd. for giving seminars and providing consultation services in Japan without a license. This month, it suspended several local venues for poor security measures.
Binance has consistently ranked as the world's largest cryptocurrency exchange by volume since late last year, according to Coinmarketcap.com. It held the top volume rank for the past 24 hours, trading $1.8 billion, the website shows.
To contact the reporters on this story: Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net, Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net.
To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Michael Patterson, Sam Mamudi
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