Bybit Halts New User Onboarding in Japan Amid Regulatory Crackdown

Bybit, one of the world's largest cryptocurrency exchanges, has announced it will stop accepting new users in Japan starting October 31, 2025, at 12:00 UTC. This decision marks a significant shift in its operations and comes in response to increasing regulatory pressure from Japan's Financial Services Agency (FSA), which has issued multiple warnings to Bybit for operating without a license—first in 2021 and again in 2023.

Existing Japanese customers will not be immediately affected and can continue using their accounts, but the halt on new signups ends years of uneasy coexistence with regulators. Bybit described the move as part of its proactive approach to align with Japan's emerging regulatory framework for digital assets, emphasizing its commitment to operating responsibly under local laws.

Japan has built a comprehensive digital-asset regime over the years, driven by past incidents like the collapses of Mt. Gox and Coincheck. Key regulatory milestones include the 2016 amendment to the Payment Services Act, which mandated exchange registration, customer verification, and asset segregation; 2019 revisions that extended securities-law standards to crypto derivatives and curbed marketing; and a 2022 overhaul that incorporated the global 'travel rule' for tracing transfers into domestic law.

In 2025, regulators are pushing further. A recent FSA discussion paper outlines plans to require exchanges to retain customer assets onshore for faster recovery in case of failure and to explore insider-trading rules for tokens. Local reports suggest cryptocurrencies may soon be classified as financial products under the stricter Financial Instruments and Exchange Act, bringing them under more rigorous oversight.

Bybit, founded in 2018 and based in Dubai, has faced similar regulatory challenges globally. It suspended operations in the UK last year ahead of the Financial Conduct Authority's marketing-rule rollout, shut services in France after being blacklisted by the AMF, and reached a 2022 settlement with Ontario regulators that barred new Canadian users. Additionally, in February 2025, Bybit suffered one of crypto's largest thefts—an estimated $1.5 billion hack—which reinforced regulators' insistence on cold-wallet custody and tight limits on hot-wallet exposure.

Japan's enforcement structure is multilayered, with the FSA overseeing licensing and supervision, and the Japan Virtual and Crypto Assets Exchange Association (JVCEA)—a self-regulatory body approved in 2018—setting detailed operational standards. Exchanges that fail to join or comply with the JVCEA have little hope of accessing Japanese customers.

Licensed local exchanges such as bitFlyer, GMO Coin, and Coincheck are expected to benefit from this shift, capturing new-account demand under Japan's tightly controlled custody and anti-money laundering framework. These platforms already operate under travel-rule tracking and cold-wallet custody thresholds that are far more rigid than most offshore venues.

Bybit's pause is seen as a recalibration rather than a retreat, as the company works toward compliance with Tokyo's exacting standards. The outcome—whether registration, partnership with a domestic platform, or a permanent exit—will depend on how quickly Bybit can adapt to the new regulations and how far Japan goes in redefining what a compliant crypto exchange entails.