Bybit to Discontinue Operations in Japan by 2026 Due to Regulatory Compliance Challenges

Bybit has officially announced that it will cease its services for users in Japan, implementing account restrictions gradually starting in 2026 to comply with local laws.

Key Takeaways

Bybit will stop services for Japanese users beginning in 2026 due to regulatory compliance issues.
The FSA has increased oversight of unlicensed crypto platforms in Japan.
Bybit had ceased new registrations in Japan last October as part of a compliance review.
The company is exploring more crypto-friendly jurisdictions globally, including plans to acquire Korbit in South Korea.
Japan's regulatory framework for cryptocurrencies is evolving, aiming to improve market protection and streamline operations for exchanges.

Bybit to Exit Japan in 2026 Over Regulatory Compliance Issues

The exchange, which is the second largest in the world by trading volume, has sent notifications to affected users through email, advising those who believe they have been misclassified to complete Identity Verification Level 2 by January 22, 2026. Users who do not comply may be classified as Japanese residents.

This decision comes in light of increasing regulatory scrutiny from Japan's Financial Services Agency (FSA), which has stepped up enforcement against unlicensed cryptocurrency platforms in the country.

Bybit had previously halted new user registrations from Japan in October, as it worked to assess local regulatory requirements and align with the standards imposed by Japanese authorities.

Bybit's Ongoing Compliance Challenges with the FSA

Japan’s efforts to regulate unregistered exchanges date back to legislation enacted in 2017, which mandated FSA-issued licenses for platforms operating with Japanese clients.

The FSA issued formal warnings to Bybit back in November 2024 and March 2023, claiming that the exchange was engaging in cryptocurrency operations with Japanese clients without proper authorization.

While existing services had continued post the registration pause in October, the current announcement signifies Bybit's complete exit from the Japanese market.

Apple had already restricted Japanese users from downloading Bybit's app in February, showing persistent “Connecting…” messages or “Cannot connect to iTunes Store” errors when accessing it through the Japanese App Store.

The FSA has consistently argued that platforms like Bybit attract Japanese clients by using Japanese-language interfaces and providing customer support, all without the necessary domestic licenses.

While downloads from Google Play were seemingly unaffected at the time, regulatory surrounding pressures only intensified.

Bybit expressed its apologies for any disturbances and stated that affected users will receive further updates regarding the remediation process in future communications.

Bybit’s Global Strategy Amid Changing Regional Regulations

Apart from Japan, Bybit has encountered various regulatory challenges as it seeks expansion into more crypto-friendly regions in Asia.

The Monetary Authority of Singapore mandated that unlicensed digital token service providers halt overseas activities by June, leading Bybit to consider relocating staff to Dubai and Hong Kong, where the licensing structures provide clearer regulatory guidance.

Recently, it has been reported that Bybit is discussing the acquisition of Korbit, South Korea's fourth-largest cryptocurrency exchange, which could facilitate a smoother regulatory entry into the country.

Despite some regional complexities, Dubai's Virtual Asset Regulatory Authority has granted licenses to numerous firms, including Bybit.

In response to regional hurdles, Bybit launched its dedicated EU platform, Bybit.eu, in July after obtaining a Markets in Crypto-Assets Regulation license from Austria's Financial Market Authority.

This fully licensed Crypto-Asset Service Provider now functions across 29 countries within the European Economic Area, with an estimated user base of about 450 million and its headquarters based in Vienna.

Mazurka Zeng, Managing Director and CEO, stated that launching Bybit.eu represents “a long-term commitment to Europe” that balances advanced technology with strong regulatory measures.

The exchange also plans to establish regional offices in France, Germany, Spain, and Italy, while providing 24/7 multilingual customer support.

Japan’s Comprehensive Regulatory Reforms

Japan's changing regulatory landscape extends beyond individual enforcement measures against exchanges.

The FSA is gearing up for substantial reforms that would ban insider trading in cryptocurrencies, necessitate exchanges to maintain dedicated reserves to safeguard against customer losses, and reduce crypto profit taxes to a flat 20% from the current top rate of 55%.

The agency aims to submit amendments to the Financial Instruments and Exchange Act in 2026, reclassifying digital assets from “means of settlement” to “financial products” akin to stocks and bonds.

The proposed reserve requirement would align with practices long utilized in Japan’s securities industry, with platforms required to maintain capital to cover user losses from hacks or operational failures, following high-profile incidents such as the $312 million theft from DMM Bitcoin in May 2024 and Bybit's own $1.46 billion hack in February 2025.

The FSA is also contemplating a policy change that would permit banks to hold cryptocurrencies for investment and allow banking groups to register as licensed exchanges, lifting a restriction imposed in 2020.

Despite stricter regulation, cryptocurrency adoption in Japan is on the rise. The FSA reported over 12 million registered accountsas of February 2025, with deposits exceeding ¥5 trillion.

Bybit Exit Japan - Annual Percentage Change by Country Chart from Chainalysis

Data from Chainalysis indicates a 120% year-over-year increase in on-chain value received.