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Bybit, one of the world’s largest cryptocurrency exchanges, has announced plans to phase out services for Japanese residents starting in 2026. The move comes as part of the exchange’s efforts to comply with Japan’s strict regulatory framework, which requires crypto platforms to obtain approval from the country’s Financial Services Agency (FSA) before serving local users.
The decision marks another significant development in Japan’s evolving crypto landscape, highlighting the growing tension between global exchanges and domestic regulatory requirements.
Gradual Service Phase-Out Plan
Bybit confirmed that services for users classified as Japanese residents will be discontinued on a rolling basis beginning in 2026. Rather than an immediate shutdown, the exchange will introduce gradual account restrictions, allowing users time to prepare for the transition.
According to the announcement, some users may have been incorrectly identified as Japanese residents. In such cases, Bybit has asked affected customers to complete additional identity verification checks to confirm their residency status. The exchange said it will provide further updates on remediation and timelines through subsequent communications.
This phased approach aims to minimize disruption while aligning Bybit’s operations with local compliance expectations.
Japan’s Strict Crypto Regulations
Japan is widely known for maintaining one of the most stringent cryptocurrency regulatory regimes in the world. Any exchange offering crypto trading services to Japanese residents must be registered with the Financial Services Agency and adhere to strict operational, security, and consumer protection standards.
Bybit is currently not registered with the FSA, which places it among several offshore exchanges that have faced regulatory pressure in the country. In February, Japan’s regulator requested Apple and Google to suspend app downloads for five unregistered crypto exchanges, including Bybit, MEXC Global, LBank Exchange, KuCoin, and Bitget.
These measures underscore Japan’s zero-tolerance stance toward unlicensed crypto operations.
Earlier Restrictions In Japan
The latest announcement follows earlier steps taken by Bybit to reduce its exposure to the Japanese market. In October, the exchange paused new user registrations in Japan, citing ongoing discussions with the FSA.
This move was widely interpreted as a precautionary step as regulators increased scrutiny on foreign crypto platforms operating without proper authorization. Since then, Japanese users have faced growing uncertainty regarding access to offshore exchanges.
Industry observers note that Japan’s cautious regulatory approach, while protective of consumers, has also created significant barriers for international crypto firms seeking market entry.
Market Impact And Trading Volume
Despite its retreat from Japan, Bybit remains a dominant force in the global crypto market. The exchange often ranks as the second-largest cryptocurrency trading platform by daily volume.
At the time of writing, Bybit processed approximately $4.3 billion in trades over a 24-hour period, according to CoinGecko data. Its product offerings span spot trading, derivatives, copy trading, and various yield-generating tools.
The Japan exit is therefore unlikely to have a material impact on Bybit’s global trading activity, though it may affect Japanese traders who rely on offshore platforms for advanced trading features.
Regulatory Bottleneck Concerns
Japan’s regulatory environment has drawn criticism from industry leaders who argue that excessive oversight is driving innovation elsewhere. In July, Maksym Sakharov, co-founder and CEO of decentralized onchain bank WeFi, said Japan’s regulatory bottleneck is pushing blockchain innovation out of the country.
While Japan was once seen as a crypto-friendly jurisdiction following its early recognition of Bitcoin, the current framework has made it challenging for startups and global exchanges to operate efficiently within the country.
This tension continues to shape the future of crypto adoption and innovation in Japan.
Bybit’s Global Expansion Strategy
Even as it withdraws from Japan, Bybit is actively expanding in other regulated markets. The exchange recently reentered the UK market after a two-year pause, launching a new platform that offers spot trading and peer-to-peer services.
Instead of securing direct registration, Bybit is operating under a financial promotions arrangement approved by Archax, a UK-regulated digital asset firm. This strategy allows the exchange to regain access to British users while remaining compliant with local rules.
Additionally, Bybit secured a Virtual Asset Platform Operator (VASP) license from the United Arab Emirates’ Securities and Commodities Authority last month, eight months after receiving in-principle approval.
Outlook For Japanese Users
For Japanese residents, Bybit’s exit reinforces the need to rely on FSA-registered exchanges for crypto trading. While these platforms offer higher consumer protection, they often come with fewer product options compared to offshore exchanges.
As Japan continues to tighten oversight, more foreign crypto exchanges may reassess their presence in the country. Meanwhile, Bybit’s focus appears firmly set on expanding in jurisdictions where regulatory pathways are clearer and more accommodating.