On Monday, Japan’s Financial Services Agency (FSA) issued a warning to crypto exchange Bybit over unregistered operations. 

Crypto derivatives exchange Bybit Fintech Limited has been officially warned by the FSA for running its operation without proper registration. Bybit functions as a crypto derivative exchange offering futures in digital currency, perpetual swaps, and a number of other contracts used by crypto traders.  

The warning alleges that Bybit’s operations are giving Japanese traders the ability to leverage the exchange and that the exchange has yet to register with the FSA. This marks the first warning the FSA has sent out in more than three years to a crypto exchange.

The last being Binance back in 2018 for failing to meet similar registration requirements. Currently, Japan has more than two dozen crypto exchanges operating with proper registration under the FSA. 

This marks the second warning for Bybit, though the first in Asia. Earlier in the year, the United Kingdom’s Financial Conduct Authority (FCA) issued a similar warning to Bybit. The FCA was a bit sterner with their wording, and Bybit halted all operations in the U.K. 

Despite these recent hurdles, Bybit still ranks in the top five in terms of the largest bitcoin (BTC) futures exchanges volume of trades.

Japan not the only country cracking down 

The warning to Bybit comes during a time, where federal officials worldwide have begun scrutinizing cryptocurrency services more and more.  

South Korea, for example, will be rolling out a new 20% income tax on crypto transactions beginning in the 2022 tax year. This, like most of the new regulations, is not only about the country getting in on the profit, but also combating illegal or illicit activities using crypto as a shield. 

One of the biggest issues surrounding crypto trading worldwide is tax evasion, which has become a significant problem in the United States. For the 2020 tax year, which just ended a few weeks ago, the U.S. added crypto questions to tax returns in order to shrink the massive tax gap in the country.

Charles Rettig, Commissioner for the IRS, believes that more than $443 billion in unpaid taxes may be attributed to virtual currencies. Other countries, such as China, have begun to regulate crypto mining operations, recently. This move has less to do with illegal activities or tax evasion than it has to do with environmental and infrastructure issues. Earlier in the month, China also banned national financial institutions from offering crypto-related services.