- Bybit plans to begin gradually scaling back services for Japan-based users from 2026 onward as regulatory pressure continues.
- Strict licensing rules in Japan are forcing unregistered cryptocurrency exchanges to face restrictions or exit the market.
- While retreating from Japan, Bybit is expanding in regions with clearer frameworks such as the UK and the Middle East.
Bybit is preparing to phase down services for users resident in Japan starting in 2026, marking another shift in how global cryptocurrency exchanges respond to one of the world’s most tightly regulated digital-asset markets.
This decision follows months of regulatory pressure and earlier steps the exchange has taken to reduce its domestic footprint.
Bybit says the process will not be an abrupt shutdown but a structured, long-term application of account restrictions aligned with Japan’s regulatory framework.
The move highlights the uneven global regulatory landscape for crypto platforms, as the exchange expands in some countries while scaling back in others.
Regulatory pressure in Japan
The phased restrictions apply to users identified as residents of Japan, and Bybit is implementing these changes incrementally.
Users who believe they have been incorrectly classified are being asked to complete additional identity verification to resolve their account status.
Bybit is not registered with the Financial Services Agency (FSA) of Japan, and any exchange offering services to Japanese residents must obtain local approval.
Japan’s regulatory regime—shaped by past exchange failures and concerns about consumer protection—has long been regarded as among the strictest in the world.
These rules limit the ability of overseas platforms to operate freely in Japan without a local license.
Bybit’s decision to begin structured withdrawals from 2026 reflects how increasingly difficult it has become for unregistered foreign exchanges to maintain access to Japanese users.
Previous restrictions in Japan
The recent announcement follows earlier measures Bybit took to reduce its exposure to the Japanese market.
In October, the exchange halted new user registrations in Japan, citing ongoing discussions with regulators.
That move underscored the growing unsustainability of operating without local registration.
In February, Japan’s Financial Services Agency asked Apple and Google to stop offering downloads for five unregistered crypto exchange apps in their app stores, strengthening enforcement efforts.
Alongside Bybit, MEX Global, LBank Exchange, KuCoin, and Bitget were included on that list. The request reinforced Japan’s stance on tightly managing local user access.
Industry observers warn the regulatory bottleneck could be pushing crypto development offshore and stifling innovation domestically.
In July, Maxim Sakharov, co‑founder and CEO of WeFi, said Japan’s strict oversight has driven some crypto development out of the country as companies seek more flexible jurisdictions.
Despite reducing its presence in Japan, Bybit remains one of the most active crypto exchanges globally.
Rather than a full withdrawal from highly regulated markets, Bybit appears to be adopting a jurisdiction‑specific strategy—restricting certain services in some places while expanding in regions with clearer, more flexible frameworks.
Expansion outside Japan
While scaling back in Japan, Bybit is rebuilding and expanding its presence in other markets.
After a two‑year pause, the exchange has reentered the UK market, launching a platform that offers spot trading and peer‑to‑peer services.
The UK offering is structured not as a direct UK registration but through a promotional arrangement authorized by Archax.
Bybit has also been strengthening its footprint in the Middle East.
Last month, eight months after receiving provisional approval, the firm obtained a virtual asset platform operator license from the UAE’s Securities and Commodities Authority.
That license enables the exchange to expand services in a region positioning itself as a hub for digital asset firms.