Bybit will exit Japan in 2026 after years of regulatory pressure from the Financial Services Agency, which has required licensed operations since 2017 and escalated enforcement in against unregistered exchanges.
Bybit has declared that it will end services for Japanese residents and slowly enforce account restrictions beginning in 2026 as part of its efforts to follow with local regulations.
The exchange, recently the world’s second-largest by trading volume, informed impacted users by email and urged those who believe the classification is incorrect to accomplish Identity Verification Level 2 by January 22, 2026, or face being considered a Japanese resident.
The decision follows months of growing regulatory pressure from Japan’s Financial Services Agency, which has escalated oversight of unlicensed crypto platform running within the nation.
Bybit had already suspended new user registrations from Japan in October, mentioning the requirement to review nearby regulatory necessities and to assess compliance with the standards set by Japanese authorities.
Long-Running Compliance Battle With FSA
Japan’s crackdown on unregistered exchanges dates returned to 2017 law needing FSA-issued allows for platforms platforms Japanese residents.
The regulator sent formal warnings to Bybit in November 2024 and March 2023, claiming the exchange performed crypto business with Japanese counterparties without right authorization.
While current services stayed operational following the October registration pause, the recent assertion marks a entire withdrawal from the market.
Apple reportedly blocked Japanese users from downloading Bybit’s app in February, returning indefinite “Connecting…” messages or “Cannot connect with iTunes Store” errors after they tried to get access it from the Japanese App Store.
The FSA has continually claimed that platforms like Bybit court Japanese clients by Japanese-language interfaces and customer support, no matter lacking domestic licenses.
Downloads from Google Play showed up unimpacted at the time, although regulatory pressure persevered to grow.
Bybit apologized for any inconvenience and said impacted users will get additional updates on the remediation procedure in subsequent communications.
Global Repositioning Amid Regional Regulatory Shifts
Beyond Japan, Bybit has confront regulatory barriers across Asia as it extended into more crypto-friendly jurisdictions.
The Monetary Authority of Singapore ordered unlicensed digital token service providers to quit overseas activities via June, prompting Bybit to reportedly explore moving team of workers to Dubai and Hong Kong, wherein licensing frameworks provide extra regulatory clarity.
In fact, last month, Cryptonews reported that the exchange is in talks to acquire Korbit, South Korea’s fourth-biggest crypto trade, to ease its regulatory pathway into the nation.
While there are frictions in some nations, Dubai’s Virtual Asset Regulatory Authority has currently issued licenses to over 20 firms, consisting of Bybit.
In spite of the local setbacks, Bybit launched its EU-dedicated platform, Bybit.eu, in July after giving a Markets in Crypto-Assets Regulation license from Austria’s Financial Market Authority.
The completely licensed Crypto-Asset Service Provider now works across 29 European Economic Area nations, accomplishing about 450 million users, and has its headquarters in Vienna.
Mazurka Zeng, Managing Director and CEO, called the release “an long-term commitment to Europe” that balances technology with sturdy regulatory standards.
The exchange plans to open regional offices throughout France, Germany, Spain, and Italy at the same time as providing 24/7 multilingual customer assistants .
Japan’s Broader Regulatory Overhaul
Japan’s strengthening stance extends properly beyond individuals exchange executing movements.
The FSA is getting ready sweeping reforms that world outlaw insider trading in cryptocurrencies, need exchanges to keep committed reserves in opposition to customer losses, and lower crypto profit taxes to a flat 20% from the current 55% top price.
The regulator targets to publish amendments to the Financial Instruments and Exchange Act in 2026, reassigning digital assets from “means of settlement” to “financial products” comparable to stocks and bonds.
The reserve requirement proposal would mirror frameworks long used in Japan’s securities industry, with platforms setting apart capital to compensate users for hacks or operational failures following high-profile incidents, along with DMM Bitcoin’s $312 million robbery in May 2024 and Bybit’s own $1.46 billion hack in February 2025.
The FSA is also considering permitting banks to hold cryptocurrencies for investment purposes and allowing bank groups to register as licensed exchanges, reversing a 2020 restriction.
Japan’s crypto adoption keeps developing in spite of stricter oversight. According to the Financial Services Agency, over 12 million registered debts as of February 2025, and deposits exceeding ¥5 trillion.
In truth, Chainalysis reported a 120% year-over-year growth in on-chain value obtained.
