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Every day it seems that some new negative development emerges for the cryptocurrency sector, and just days after digital currencies evaded the wrath of the G-20 (allegedly thanks to the BOJ's Kuroda), fears of which had slammed bitcoin and its peers to multi-week lows, overnight cryptos tumbled again this time dragged lower by fears of regulatory trouble in Japan where Binance - the world’s largest cryptocurrency exchange at the moment - was said to face a warning from the local regulators for operating without a license, according to Nikkei, unleashing a fresh round of concerns that increased regulatory scrutiny will curb demand for digital assets, even though this has now become a daily event.

According to the rumor initially reported by Nikkei , and which started the latest avalanche selling, Japan’s Financial Services Agency was planning to tell Binance to stop operating in the country without official approval, Bloomberg reported citing a "person familiar" who also added that Binance has several staff in Japan and has been expanding without receiving permission.

Bitcoin erased gains after Nikkei first reported the FSA’s plans, and the cryptocurrency was trading 2.2 percent lower at $8,700.85 according to Bloomberg data. Rival coins including Ether and Ripple also dropped.

In retrospect, this may have been just another attempt to spook the weak hands and shake out the "pretend-HODLers" by sending prices lower on "fake news": back in January, Binance told Bloomberg that it was working to acquire a license in Japan.

Shortly after the Nikkei report, Binance CEO Changpeng Zhao denied that the exchange has “received any mandates” from the Financial Services Agency and describing Nikkei’s report as “irresponsible journalism

Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them.

There is no reason why Japan would single out Binance: as Bloomberg notes, to date, the FSA has issued licenses to 16 cryptocurrency exchanges, including bitFlyer Inc. and Quoine. Another 16 were given permission to operate without a license. Among those was Coincheck Inc., which suffered a $500 million hack in January.

Ironically, the Coincheck hack may have benefited the industry by forcing local exchanges to clean up their act, as Japanese authorities have clamped down on the industry. Last month, the FSA issued an administrative penalty against Macau-based Blockchain Laboratory Ltd. for giving seminars and providing consultation services in Japan without a license. And 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 ranking for the past 24 hours, trading $1.8 billion, the website shows.

Over the past year, Japan has emerged as the top venue for cryptocurrency trading, and according to some analyses, the reason why the BOJ has been surprisingly supportive of cryptocurrencies - and may have warned against a harsher G-20 crackdown - is because cryptos now have a direct impact on Japanese wealth and GDP (see "Bitcoin "Wealth Effect" To Boost Japan's GDP Up To 0.3%.")