Bybit Phases Out Japan Services Amid FSA Compliance Push

Bybit, one of the world's largest cryptocurrency exchanges, announced on Monday that it will begin phasing out services for Japanese residents starting in 2026. The move comes as the company seeks to comply with Japan's strict financial regulations, which require crypto exchanges to register with the Financial Services Agency (FSA). The exchange stated that affected users will receive additional updates regarding the process, with gradual account restrictions expected.

The decision marks the latest step in Bybit's strategy to limit its exposure to Japan. In October, the company paused new user registrations in the country, citing ongoing discussions with the FSA. Japan has long maintained one of the most stringent regulatory frameworks for cryptocurrency exchanges, emphasizing customer protection and anti-money laundering measures. The FSA has previously pressured Apple and Google to delist apps of unregistered exchanges, including Bybit according to reports.

Users who are incorrectly flagged as Japanese residents have been advised to complete additional identity checks to avoid restrictions according to the exchange. Bybit emphasized that the process will be conducted on a rolling basis, giving users time to adjust their positions. The phased approach is designed to ensure compliance while minimizing disruption for impacted traders.

Regulatory Pressure and Market Impact

Japan's regulatory environment has become increasingly challenging for global crypto exchanges. The FSA has signaled a shift toward tighter oversight, including requirements for liability reserves to protect users from operational risks. These measures aim to safeguard retail investors but have been criticized for stifling innovation and driving crypto activity overseas according to analysts. As a result, several major exchanges have opted to exit the market rather than seek full licensing according to market reports.

Bybit is not the first global exchange to face regulatory hurdles in Japan. In early 2025, the FSA requested app stores to remove several unregistered platforms, including Bybit, MEXC Global, and KuCoin. This move has increased the compliance burden for offshore platforms, particularly those that do not hold local licenses according to industry experts. Exchanges must now navigate a complex set of requirements, including asset segregation, reporting standards, and leverage limits.

The phased restrictions will affect a significant portion of Bybit's user base, particularly those who rely on its derivatives and advanced trading features according to analysts. As the second-largest crypto exchange by trading volume, Bybit processes approximately $4.3 billion in trades daily. Its exit from Japan underscores the growing trend of global crypto platforms tailoring services to comply with local regulations, often at the expense of market expansion according to industry observers.