Bybit Adjusts to Regulatory Changes, Halts New User Registration in Japan

In a proactive move to align with Japan's evolving regulatory framework for digital assets, Bybit, a prominent global cryptocurrency exchange, has announced it will pause new user registrations in Japan starting October 31, 2025. This decision comes as the exchange adapts to the increasingly stringent regulations imposed by the country's Financial Services Agency (FSA).

Bybit emphasized in an official statement that this action reflects its commitment to responsible operations and compliance with local laws and regulatory expectations. The exchange reassured its existing Japanese users that current services will remain fully operational for the time being. Bybit plans to provide further updates on the situation as discussions with regulatory authorities progress.

Japan's Regulatory Landscape: A Closer Look

This decision is set against the backdrop of a broader trend in Japan towards more comprehensive regulation of cryptocurrencies. Reports indicate that the FSA is considering regulatory reforms that would permit banks to acquire and hold cryptocurrencies like Bitcoin and operate licensed crypto exchanges.

The proposed reforms are slated for review at an upcoming Financial Services Council meeting, with the aim of harmonizing digital assets with traditional financial instruments such as stocks and government bonds. The FSA intends to develop a framework that addresses the risks associated with cryptocurrency volatility, potentially requiring banks to meet enhanced capital and risk-management standards before holding digital assets. This move could potentially pave the way for wider institutional adoption within Japan's regulated banking sector.

Impact of Regulations on Crypto Innovation

Last July, Maksym Sakharov, co-founder and CEO of decentralized onchain bank WeFi, asserted that regulatory bottlenecks in Japan, rather than taxes, are the primary reason crypto innovation is leaving the country. Sakharov stated that even if the proposed 20% flat tax on crypto gains is implemented, Japan's "slow, prescriptive, and risk-averse" approval culture will continue to drive startups and liquidity offshore.


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