Hong Kong: Bitcoin slipped after one of the world’s largest cryptocurrency exchanges was reported to face a government warning in Japan, adding to concerns that increased regulatory scrutiny will curb demand for digital assets.

Japan’s Financial Services Agency plans to issue a warning against Binance, the trading venue founded by Zhao Changpeng, for operating in Japan without registration, Nikkei reported on Thursday. Bitcoin erased gains after the news, falling 1.3% to $8,781.11 as of 5:43 pm in Hong Kong.

Governments around the world have been stepping up scrutiny of digital assets in recent months amid concerns ranging from money laundering to tax evasion and fraud.

Japan, one of the most active markets for cryptocurrencies globally, introduced a licensing system for virtual currency exchanges last year. Bloomberg