Cryptocurrency exchange Bybit has announced that it will gradually discontinue services for users residing in Japan starting in 2026. The move comes as the platform works to comply with Japan’s strict financial regulations, which require crypto exchanges to be registered with the country’s Financial Services Agency (FSA). Bybit currently does not hold such approval.
The exchange said in the official announcement that Japanese users will face phased account restrictions over time.Anyone who believes they were incorrectly flagged as a Japanese resident has been asked to complete additional identity verification, known as Identity Verification Lv. 2 (POA/KYC2), by January 22, 2026.
It stated that failure to do so will result in the user being classified as a Japanese resident and will be subject to account restrictions. The move follows a series of regulatory actions in Japan. In October, Bybit paused new user registrations. Moreover, earlier this year, the FSA asked Apple and Google to remove several unregistered crypto apps, including Bybit, KuCoin, MEXC, LBank, and Bitget. The primary reason behind issuing a warning was the customer protection standards, hot wallet segregation, and a lack of legal recourse in the case of insolvency and security violations.
Japan maintains one of the world’s most stringent crypto regulatory regimes. While aimed at protecting consumers, industry observers say these rules have pushed some crypto businesses to shift operations overseas. Separately, in November, Japan’s Financial Services Agency (FSA) approved a pilot program for yen-backed stablecoins led by the country’s three largest banks, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Financial Group.
The project is being carried out under the FSA’s Payment Innovation Project, which aims to encourage financial innovation while keeping regulatory risks under control. Even as it scales back in Japan, Bybit has expanded its presence in other regulated markets. On December 20, Bybit reentered the UK market after a two-year exit, relaunching spot and peer-to-peer trading services. The relaunch is supported by a partnership with Archax, an FCA-licensed digital asset exchange that oversees Bybit’s financial promotions and regulatory compliance.
Earlier, on October 20, Bybit secured the United Arab Emirate’s (UAE’s) first Virtual Asset Platform Operator License from the Securities and Commodities Authority (SCA). The approval allows the exchange to offer trading, custody, brokerage, and fiat conversion services to retail and institutional clients, making it the only fully licensed crypto exchange operating under the UAE’s national framework.
Bybit executives said the UAE license reflects the company’s focus on regulatory alignment. The exchange plans to expand its regional operations by hiring more than 500 employees in Abu Dhabi and Dubai and increasing its involvement in Web3 education initiatives.
