Bybit will begin phasing out services for residents of Japan starting in 2026 as the crypto exchange moves to meet the country’s regulatory requirements, the company said on Monday.
The exchange announced that it will gradually apply account restrictions instead of a sudden shutdown. The process will affect users classified as Japanese residents on a rolling basis.
Bybit explained that residency classification is based on internal compliance checks. Users who believe they were incorrectly flagged have been asked to complete additional identity verification.
Moreover, the company said that affected users will receive direct notices as restrictions are introduced. Future communications will share more details on remediation steps.
Bybit faces Japan regulation challenges
Bybit is not registered with Japan’s Financial Services Agency, which requires exchanges serving local users to obtain domestic approval. Operating without registration has placed offshore platforms under sustained regulatory pressure.
Bybit ranks as the world’s second-largest cryptocurrency exchange based on daily trading volume. CoinGecko data shows that the exchange processed about $2.9 billion in trades over the past 24 hours.
Source: CoinGecko
The move follows earlier actions taken by Bybit to reduce its exposure to Japan. In October, the exchange paused new user registrations in the country, citing ongoing discussions with the Financial Services Agency.
Japan has recently stepped up regulation of non-registered crypto platforms. In February, the FSA requested Apple and Google to restrict the download of the apps involving five exchanges, such as Bybit, MEXC Global, LBank Exchange, KuCoin, and Bitget.
Japan’s strict crypto rules raise innovation concerns
Japan has one of the most intense regulatory policies on digital assets. Regulators have focused on consumer protection, licensing regulations, and supervision of offshore platforms.
Players in the industry have cautioned that tough regulations can drive innovation to alternative markets. In July, WeFi co-founder and chief executive Maksym Sakharov said that Japan was pushing blockchain development through regulatory bottlenecks.
As Bybit has been pulling back in Japan, it has grown in other markets. The platform recently relocated to the United Kingdom, two years after ceasing operations with a platform that provided spot trading and peer-to-peer services as part of a promotions program endorsed by Archax.
Bybit has also enhanced its presence in the Middle East. Last month, Bybit obtained a Virtual Asset Platform Operator license from the United Arab Emirates Securities and Commodities Authority, eight months after receiving in-principle approval from the regulator.