Bybit has announced a phased withdrawal from Japan starting in 2026, highlighting how the country’s strict regulatory framework continues to challenge global cryptocurrency exchanges. Instead of an abrupt shutdown, the exchange plans to introduce rolling account restrictions for users identified as Japanese residents. Users who believe they have been incorrectly classified will be asked to complete additional identity verification to maintain access.
This move reflects a broader trend in the crypto industry, where companies are reassessing their presence in markets with demanding compliance requirements while focusing growth efforts elsewhere.
Why Japan’s Crypto Regulations Are Forcing Bybit’s Exit
Japan’s Financial Services Agency (FSA) enforces one of the world’s most rigorous regulatory regimes for cryptocurrency platforms. Any exchange serving Japanese residents must obtain a domestic licence, a system shaped by past exchange collapses and a strong emphasis on consumer protection. Bybit is not registered with the FSA, making continued operations in Japan increasingly difficult.
Regulatory pressure has been building for months. In October, Bybit halted new user registrations from Japan, citing ongoing discussions with regulators. The stance hardened further in February when the FSA requested Apple and Google to block app downloads for five unregistered exchanges, including Bybit, MEXC Global, LBank, KuCoin, and Bitget. These actions reinforced Japan’s zero-tolerance approach toward unlicensed platforms.
Industry leaders argue that such strict oversight is pushing crypto innovation abroad. In July, WeFi co-founder and CEO Maksym Sakharov warned that Japan’s regulatory environment is driving development and talent to more permissive jurisdictions.
Bybit’s Global Strategy Beyond Japan
While Bybit is pulling back from Japan, it remains aggressive in other regions, adopting a jurisdiction-by-jurisdiction strategy. The exchange is scaling down in markets where regulations are restrictive while expanding where rules are clearer or more supportive.
Outside Japan, Bybit recently reentered the UK after a two-year hiatus, launching spot trading and peer-to-peer services through a promotions arrangement approved by Archax rather than direct registration. At the same time, the company has strengthened its presence in the Middle East after securing a Virtual Asset Platform Operator Licence from the UAE’s Securities and Commodities Authority, following eight months of in-principle approval.
Bybit’s gradual exit from Japan underscores the fragmented global regulatory landscape facing crypto exchanges. Instead of a one-size-fits-all approach, platforms are increasingly balancing compliance costs against market access. For Japanese users, the upcoming changes mean it is essential to monitor account status, complete any required KYC checks, and plan withdrawals as the 2026 restrictions are rolled out.
