Bybit to Exit Japan in 2026 as FSA Tightens Crypto Regulations

Highlights:

• Bybit will gradually scale back services for Japanese users as regulators tighten rules on unregistered exchanges.
• New KYC rules demand Level 2 verification by early 2026.
• Bybit is accelerating expansion in regions with clearer compliance standards.

One of the leading crypto exchanges in the world, Bybit, has announced that it will begin gradually exiting the Japanese market starting in early 2026. This is after growing pressure from Japan’s Financial Services Agency (FSA), which is known for regulating digital asset platforms under tight oversight.

Bybit had already halted registration of new users in Japan in October of 2025. At the time, negotiations with regulators were in progress. The exchange attributed the strict compliance requirements in Japan as the reason for the gradual exit strategy.

Bybit is not registered under the Japanese regulatory regime. The FSA requires all crypto exchanges that provide services to residents to register under local laws. Moreover, the current system involves asset segregation, limitations on leverage, and stringent standards of operation.

In February 2025, the Japan FSA asked Apple and Google to take down unregistered crypto exchange apps such as Bybit from their stores. That move further propelled the crackdown by Japan on platforms that were not registered.

Bybit to Shut Down Japan Operations Amid Regulatory Pressure

Bybit will end all services for Japanese residents in 2026 after pressure from Japan Financial Services Agency.

▶️ New sign-ups already stopped
▶️ Trading & deposits will be phased out
▶️ Users must complete advanced… pic.twitter.com/SnNFvx3KVr

— Crypto Patel (@CryptoPatel) December 23, 2025

KYC Requirement and Restriction Timeline

Bybit will begin enforcing account restrictions on users in Japan in 2026 to meet regulatory requirements. The company will undertake a gradual process rather than an immediate shutdown.

Bybit further advised users who had been wrongly identified as Japanese residents to verify their identities. They are required to complete Level 2 KYC, which involves proof of address, by January 22, 2026. Accounts that do not comply with the deadline will be restricted.

Affected users will be informed directly of the status of their account. Individuals who fail to pass the verification deadline will be registered as Japan-based and restricted in platform usage. The company furthermore confirmed that the limited functions might consist of derivatives and advanced trading products.

The exchange noted in the statement:

“Please update or complete your Identity Verification Lv. 2 (POA/KYC2) as soon as possible to be able to use bybit.com.”

Expansion into Friendlier Regulatory Markets

While Bybit plans to exit Japan, it is expanding in other areas with more transparent crypto regulations. The company recently re-entered the UK following a two-year hiatus. In addition, it launched a platform providing spot and peer-to-peer trading services under a promotional arrangement approved by Archax.

Bybit reentered the U.K. after a two-year exit, resuming spot trading on 100 crypto pairs under a framework that complies with FCA financial promotion rules. Bybit will operate and provide marketing of its services under the auspices of London-based crypto exchange Archax.…

— Wu Blockchain (@WuBlockchain) December 19, 2025

Meanwhile, in the Middle East, Bybit was granted a full Virtual Asset Platform Operator License by the UAE Securities and Commodities Authority. This was the final step that followed an in-principle approval earlier in the year. The moves are in the efforts of Bybit to change focus to areas where there are structured, but not restrictive, regulatory frameworks. The exchange is no longer interested in jurisdictions where compliance requirements might be inconsistent with its core services.

Bybit has also left other heavily regulated markets in the past. These include the United States, Singapore, Canada, Hong Kong, and mainland China. In each instance, the problem of licensing or outright prohibitions led to the termination of services.

Bybit, with these exits in place, is still one of the largest global crypto exchanges, processing more than $2.32 billion in daily trading volume, according to CoinGecko data. Its new regional focus indicates a broader trend across the crypto industry.