In a major development for the cryptocurrency sector, Bybit, one of the world’s largest cryptocurrency exchanges, has revealed plans to restrict services for Japanese residents starting in 2026. This decision, stemming from increased regulatory pressure from Japan’s Financial Services Agency (FSA), underscores the challenges foreign exchanges face in high-compliance markets.
The FSA has a longstanding commitment to ensuring that all crypto exchanges adhere to rigorous registration and compliance standards. Despite its significant footprint in the global crypto market, Bybit has struggled to meet Japan’s regulatory demands, which require full registration with the FSA to operate legally.
As part of its phased exit strategy, Bybit will introduce account restrictions for users identified as being based in Japan. Notably, these users must complete Level 2 Know-Your-Customer (KYC) verification by January 2026. Failure to comply will result in increasing limitations on their accounts, potentially culminating in a total loss of access.
Japan is famed for its stringent regulatory landscape concerning cryptocurrency. All exchanges operating within its borders must comply with strict regulations that encompass customer protection, asset segregation, and anti-money laundering (AML) measures. The FSA has emphasized these regulations in its ongoing scrutiny of crypto apps, even calling on major tech firms like Apple and Google to remove unregistered platforms from their stores.
Bybit has been engaged in operations in Japan for several years but has faced continuous pressure to comply with these tough regulations. The company did not secure the essential local licenses despite receiving warnings from the FSA as early as 2021.
Announced on December 24, 2025, Bybit’s phased approach aims to minimize disruption for its users, allowing them ample time to make necessary adjustments. The exchange plans to provide detailed information for affected users throughout this transition period.
Bybit’s exit from Japan is indicative of the broader trend affecting cryptocurrency exchanges globally, as they navigate rising regulatory scrutiny. The company has previously scaled back its operations in several jurisdictions known for stringent regulations, including Hong Kong and parts of Europe. Meanwhile, Bybit has continued to expand its reach in regions with more favorable regulations, recently acquiring a Virtual Asset Service Provider license in the UAE and looking to re-enter the U.K. market through alternative agreements.
This strategic pivot illustrates Bybit’s focus on adapting to a rapidly evolving regulatory environment while seeking growth opportunities in more accessible markets. As the crypto landscape becomes increasingly fragmented worldwide, exchanges must remain agile to thrive in the face of stringent compliance demands.
