Bybit will begin winding down its services for Japanese users starting in 2026, following years of pressure from Japan’s tough regulatory environment.
Key Takeaways
- Bybit will start phasing out services for Japanese residents in 2026, gradually introducing account restrictions to comply with local laws.
- Users flagged as Japan-based must complete Level 2 KYC verification by January 22, 2026 to avoid restrictions.
- Japan’s Financial Services Agency (FSA) has repeatedly warned Bybit for operating without a license since 2021.
- The move reflects Japan’s uncompromising crypto laws and the growing fragmentation of the global exchange landscape.
What Happened?
Bybit has confirmed it will discontinue services for Japanese residents in a phased approach beginning in 2026. Users have been notified that their accounts will face increasing restrictions unless they complete advanced identity checks. The announcement follows persistent warnings from Japan’s Financial Services Agency and signals one of the most high-profile exits from the country’s crypto market to date.
Bybit to Shut Down Japan Operations Amid Regulatory Pressure
— Crypto Patel (@CryptoPatel) December 23, 2025
Bybit will end all services for Japanese residents in 2026 after pressure from Japan Financial Services Agency.
▶️ New sign-ups already stopped
▶️ Trading & deposits will be phased out
▶️ Users must complete advanced… pic.twitter.com/SnNFvx3KVr
Bybit to Begin Phased Exit in 2026
In a statement on December 22, Bybit said it would gradually implement account restrictions for Japanese users starting in 2026. The company emphasized that this would be a step-by-step process, not a sudden shutdown, allowing users time to manage their positions and prepare for service limitations.
- Users mistakenly flagged as Japan-based must complete KYC Level 2 by January 22, 2026, which includes proof of address and identity.
- Accounts failing to meet this requirement will face access limits or full restrictions.
- Bybit has asked users to monitor their inboxes for further updates as the transition unfolds.
This move comes despite Bybit being one of the world’s largest crypto exchanges by trading volume. The decision underlines the rising compliance burden in markets like Japan that enforce highly regulated environments.
Longstanding Regulatory Pressure from Japan
Bybit’s exit is not sudden. The Japanese Financial Services Agency began issuing public warnings to Bybit in 2021, criticizing it for operating without registration. Despite operating in Japan for several years, Bybit has not obtained the necessary local license.
The pressure intensified in 2025 when the FSA asked Apple and Google to remove several unregistered crypto apps from their stores, including Bybit, KuCoin, MEXC Global, Bitget, and LBank.
Japan’s FSA requires all platforms serving Japanese residents to be locally registered. This includes meeting strict standards in:
- Custody of assets
- Leverage limits
- Derivatives exposure
- Segregation of client funds
- Mandatory disclosures and reserve funds
These rigorous requirements have made Japan one of the most difficult markets for offshore crypto exchanges to operate in.
Bybit’s Global Strategy Shifts Toward Compliant Regions
Bybit’s retreat from Japan follows a series of exits from other high-compliance regions, including Hong Kong, the US, Canada, France, Singapore, and mainland China. In these jurisdictions, it either suspended services entirely or scaled back offerings amid rising regulatory scrutiny.
- In Hong Kong, Bybit withdrew after being placed on the Securities and Futures Commission’s list of suspicious platforms.
- In India, Bybit temporarily suspended services in January 2025 but later resumed operations after registering with the Financial Intelligence Unit and paying a fine.
- Bybit has also begun to re-enter the UK through a promotional agreement with Archax, bypassing direct registration.
More recently, the platform secured a Virtual Asset Service Provider license in the UAE, reinforcing its pivot toward jurisdictions with more favorable or flexible regulations.
Growing Fragmentation in Global Crypto Markets
As global exchanges like Bybit react to local rules, the crypto trading environment is becoming increasingly fragmented. Depending on their country of residence, users will face varying degrees of access to products like:
- Derivatives trading
- High-leverage instruments
- Spot and peer-to-peer markets
For Japanese traders, Bybit’s phased exit narrows options, especially for those seeking advanced trading tools. They may now have to shift toward domestically licensed platforms or consider international exchanges that still accept Japanese users.
CoinLaw’s Takeaway
I think Bybit’s move tells us a lot about the new reality for global crypto platforms. In my experience, when regulators start turning up the heat, most exchanges try to find a middle ground. But Japan’s approach leaves very little wiggle room. It is crystal clear that either you comply completely or you exit. Bybit, like many others, chose the latter.
For traders, it’s frustrating. For regulators, it’s a win in consumer protection. Personally, I’ve seen this coming since Japan started tightening the screws years ago. What matters now is how the rest of Asia handles crypto oversight because this playbook could spread fast.
