Key Takeaways:
- Bybit will discontinue services for Japanese residents and roll out account restrictions starting in 2026 to meet local regulations.
- Users wrongly flagged as Japan-based must complete KYC Level 2 by January 22, 2026, or face restrictions.
- The move reflects Japan’s strict crypto regulatory stance and growing pressure on unregistered global exchanges.
Bybit has confirmed it will begin winding down services for residents of Japan, marking another major regulatory-driven retreat by a global crypto exchange. The decision signals tighter enforcement in one of the world’s most heavily regulated crypto markets.
Bybit Moves to Comply with Japan’s Strict Crypto Rules
Bybit announced it will discontinue services for Japanese residents as part of its efforts to align with Japan’s regulatory framework. The exchange said it will gradually introduce account restrictions starting in 2026, rather than enforcing an immediate shutdown.
The company emphasized that the process will be phased. Japan-based users will receive further instructions over time, allowing them to manage positions and prepare for the transition. Bybit did not specify which products will be restricted first, but derivatives and advanced trading features are likely to be affected early.
Japan requires crypto exchanges serving local users to register with the Financial Services Agency (FSA). Bybit is not registered in the country, putting it under increasing regulatory pressure.
KYC Deadline Set for January 22, 2026
Bybit warned that some users may have been automatically classified as Japanese residents based on location data or account information.
What Users Need to Do
Users who believe they were misclassified must complete Identity Verification Level 2 (KYC2), including proof of address, before January 22, 2026. Accounts that fail to meet this requirement will be treated as Japan-based and subject to restrictions.
Bybit said this verification step is critical to maintaining access to the platform for non-Japanese residents. Customer support will handle disputes on a case-by-case basis.
Japan’s Regulatory Pressure Continues to Intensify
Japan has one of the most conservative crypto oversight regimes globally. The FSA is very strict in licensing, standards of custody, leverage, and consumer protection.
Around early 2025, the Japanese government requested Apple and Google to prevent downloads of apps of various unregistered crypto exchanges, including Bybit. That move also greatly increased risk of compliance among unapproved offshore platform. Regulators say that tough regulations safeguard the retail investor. Critics evaluate the framework as retarding innovation and offshoring crypto activity.
Why Japan Is a High-Risk Market for Global Exchanges
The model of regulation in Japan is in opposition to such regions as the UAE or even parts of Europe. Exchanges must:
- Maintain local registration
- Segregate customer assets
- Meet strict reporting and compliance standards
- Limit leverage and derivatives exposure
In the case of large volume derivatives exchanges such as Bybit, these demands may interfere with the very nature of their business. Because of this, a number of large platforms have decided to de-platform or leave instead of going through complete licensing.
Bybit’s Global Compliance Strategy Is Shifting
Bybit is still growing in other regulated markets as they leave Japan. Recently, the exchange got a license of a Virtual Asset Service Provider in the UAE, which made its presence in the Middle East stronger. It has also re-registered in the UK via a compliant promotions system instead of the direct registration.
This trend indicates that Bybit has been focusing on jurisdictions that have more favorable or than not a more lenient regulatory framework and abandoning markets where compliance is expensive.
Market Fallout for Japan-Based Crypto Traders
Bybit is said to be one of the biggest crypto exchanges in the world by trading volume, and it handles billions of dollars of transactions every day. Restricted access in Japan narrows the choice of local traders particularly those who want derivatives and sophisticated trading instruments.
The relocation also reflects a bigger trend: global crypto platforms are becoming more regionally fragmented in their service provision. Depending on the location of residence, users will be exposed to various products, leverage limits, and access.
Read More: Japan Reclassifies Crypto, Proposes Major Tax Relief for Digital Asset Investors
