Bybit to gradually scale back Japan services from 2026 due to tight crypto regulations

• Bybit will gradually scale back services for Japanese users from 2026 amid ongoing regulatory pressure.
• Japan’s strict licensing rules are forcing unregistered crypto exchanges to limit or exit the market.
• While pulling back in Japan, Bybit is expanding in the UK and Middle East under clearer frameworks.

Bybit is preparing to gradually scale back services for users based in Japan from 2026, marking a further shift in how global crypto exchanges navigate one of the world’s most tightly regulated digital asset markets.

The move follows months of regulatory pressure and earlier steps taken by the exchange to reduce its footprint in the country.

Bybit said the process will involve rolling account restrictions applied over time, rather than an immediate shutdown, as it aligns with Japan’s regulatory framework.

The development comes even as the exchange expands in other jurisdictions, underlining the uneven global regulatory landscape for crypto platforms.

Japan’s regulatory pressure

The phased restrictions will apply to users identified as Japanese residents, with Bybit implementing the measures on a rolling basis.

Users who believe they have been incorrectly classified have been asked to complete additional identity verification checks to resolve their status.

Bybit is not registered with the Financial Services Agency, which requires crypto exchanges serving Japanese residents to obtain local approval before offering services.

Japan’s regulatory regime has long been regarded as one of the strictest globally, shaped by past exchange failures and consumer protection concerns.

This framework has limited the ability of overseas platforms to operate freely in the country without a local licence.

Bybit’s decision to begin a structured withdrawal from 2026 reflects the growing difficulty for unregistered foreign exchanges to maintain access to Japanese users.

Earlier restrictions in Japan

The latest announcement builds on earlier actions taken by Bybit to curb its exposure to the Japanese market.

In October, the exchange halted new user registrations in Japan, citing ongoing discussions with regulators.

That decision signalled that continued full operations without registration were becoming increasingly unsustainable.

Regulatory scrutiny intensified in February, when Japan’s Financial Services Agency requested that app stores run by Apple and Google suspend downloads of five unregistered cryptocurrency exchanges.

Alongside Bybit, the list included MEXC Global, LBank Exchange, KuCoin, and Bitget. The move reinforced Japan’s stance that access to local users must be tightly controlled.

Industry figures have warned that this regulatory bottleneck is driving innovation elsewhere.

In July, Maksym Sakharov, co-founder and CEO of WeFi, said Japan’s strict oversight was pushing crypto development out of the country, as companies look for more flexible jurisdictions.

Despite the Japan pullback, Bybit remains one of the most active exchanges globally.

Rather than exiting heavily regulated markets altogether, Bybit has increasingly adopted jurisdiction-specific strategies, limiting certain services while expanding in regions with clearer or more accommodating frameworks.

Expansion beyond Japan

While scaling down in Japan, Bybit is simultaneously rebuilding its presence in other markets.

The exchange is reentering the UK after a two-year pause, launching a platform that offers spot trading and peer-to-peer services.

The UK return is structured through a promotions arrangement approved by Archax, rather than through direct UK registration.

Bybit has also strengthened its position in the Middle East.

Last month, it secured a Virtual Asset Platform Operator Licence from the United Arab Emirates’ Securities and Commodities Authority, eight months after receiving in-principle approval.

The licence allows the exchange to expand services in a region that has actively positioned itself as a hub for digital asset firms.