Bybit Suspends New User Registrations in Japan Due to Emerging Regulations

Bybit halts new user onboarding in Japan, citing ‘emerging’ regulations

Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has announced that it will halt new user registrations in Japan starting October 31. This decision comes as the exchange seeks to comply with new regulations issued by the nation's Financial Services Agency (FSA).

In a statement released on Wednesday, Bybit explained that this pause in onboarding new users is part of its “proactive approach” to align its operations with Japan’s evolving regulatory framework for digital assets. The exchange emphasized its commitment to operate responsibly and ensure compliance with local laws and regulatory expectations.

For now, existing Japanese customers will remain unaffected, as all current services will continue to be operational. Bybit has indicated that further updates will be provided as discussions with regulators continue.

Top exchanges by market cap. Source: CoinMarketCap

Japan’s FSA Considers Allowing Banks to Hold Bitcoin

Recently, it was reported that the FSA is contemplating regulatory reforms that could permit banks to acquire and hold cryptocurrencies like Bitcoin, as well as operate licensed crypto exchanges. This proposal will be discussed in an upcoming Financial Services Council meeting, aiming to integrate digital assets with traditional financial instruments such as stocks and government bonds.

The FSA plans to establish a framework that addresses the risks associated with cryptocurrency volatility. This framework might require banks to meet new capital and risk management standards before they are allowed to hold digital assets. Such a move could potentially facilitate broader institutional adoption within Japan's regulated banking sector.

Cointelegraph attempted to contact Bybit for further comments but had not received a response prior to publication.

Japan’s Regulatory Environment Fuels Crypto Exodus

In July, Maksym Sakharov, co-founder and CEO of the decentralized on-chain bank WeFi, informed Cointelegraph that regulatory obstacles, rather than taxes, are the primary reason for the outflow of crypto innovation from Japan. Sakharov mentioned that even if the proposed 20% flat tax on cryptocurrency gains takes effect, Japan's “slow, prescriptive, and risk-averse” approval process would likely lead startups and liquidity away from the country.

Key Takeaways

Bybit is pausing new user registrations in Japan from October 31 to comply with new regulations from the FSA.
Existing users will not be affected, and current services will remain available.
The FSA is considering reforms to allow banks to hold cryptocurrencies, which could enhance institutional adoption.
Regulatory challenges, more than tax issues, are driving crypto innovation out of Japan.