Bybit has announced its intention to gradually withdraw from the Japanese market starting in 2026, a move prompted by increasing regulatory scrutiny in one of the world”s most tightly controlled cryptocurrency environments.
This decision signifies a significant shift for Bybit as ongoing regulatory pressures force unregistered exchanges to limit or exit their operations in Japan. As part of the phased exit, Bybit will implement account restrictions for users identified as Japanese residents, rolling out these measures over time rather than enforcing an abrupt shutdown.
Users who believe they have been misclassified are being asked to undergo additional identity verification checks to clarify their status. Notably, Bybit is currently not registered with Japan”s Financial Services Agency (FSA), which mandates that cryptocurrency exchanges must acquire local approval before providing services to Japanese residents.
Japan”s regulatory framework, recognized as one of the strictest in the world, has been shaped by past exchange failures and a strong emphasis on consumer protection. This has created significant barriers for foreign platforms wishing to operate freely within the country without local licensing.
The impending withdrawal aligns with Bybit”s earlier actions to limit its exposure in Japan, including halting new user registrations in October 2023 amid ongoing discussions with regulators. Such decisions have underscored the growing challenges faced by unregistered foreign exchanges in maintaining access to Japanese users.
Earlier this year, the FSA intensified its regulatory efforts by requesting app stores operated by Apple and Google to suspend downloads of five unregistered cryptocurrency exchanges, including Bybit, MEXC Global, LBank Exchange, KuCoin, and Bitget. This move reinforced Japan”s commitment to controlling access for local users.
Industry experts have expressed concerns that Japan”s stringent regulatory landscape is causing innovation to migrate elsewhere. For instance, Maksym Sakharov, the co-founder and CEO of WeFi, noted that Japan”s rigorous oversight is prompting companies to seek more flexible operating environments.
Despite its withdrawal from Japan, Bybit remains one of the most active cryptocurrency exchanges globally. Instead of abandoning heavily regulated markets, Bybit is adopting jurisdiction-specific strategies, which involve limiting certain services while expanding in regions with clearer regulatory frameworks.
As it scales down operations in Japan, Bybit is simultaneously working to strengthen its presence in other markets. The exchange is reentering the UK market after a two-year hiatus, launching a platform that offers spot trading and peer-to-peer services. This reentry is structured through a promotional arrangement with Archax, avoiding the need for direct registration in the UK.
Additionally, Bybit has enhanced its position in the Middle East, having recently secured a Virtual Asset Platform Operator Licence from the United Arab Emirates” Securities and Commodities Authority, following earlier in-principle approval. This license will enable Bybit to expand its services in a region that has actively sought to establish itself as a hub for digital asset firms.
