TOKYO
(NewsBlock) -
Bybit discontinue services for Japanese
residents, the crypto exchange said on Tuesday, citing regulatory requirements
that make it unable to continue operating in compliance with Japan’s rules.
The decision highlights the
challenges global crypto platforms face in Japan, where regulators enforce some
of the world’s most stringent standards for digital asset trading, custody, and
consumer protection.
Regulatory
Pressure Behind the Exit
Bybit said the move follows a review
of Japan’s regulatory framework, which requires crypto exchanges serving
residents to register with the Financial Services Agency and meet strict
compliance, capital, and operational standards.
“Due to regulatory developments, we have made the difficult decision to discontinue services for users residing in Japan,” Bybit said in a notice posted on its website. The exchange did not specify which requirements it could not meet but said compliance obligations have increased over time.
Timeline
and User Impact
Bybit said Japanese residents will
no longer be able to open new positions or access certain services after a
specified cutoff date. Existing users are being instructed to close positions
and withdraw assets before final termination deadlines.
“We encourage affected users to take
necessary steps to manage their accounts,” the company said.
Bybit declined to comment on how
many Japanese customers will be affected or the value of assets held by those
users.
Japan’s
Strict Crypto Rules
Japan regulates crypto exchanges
under the Payment Services Act, requiring firms to register with the Financial
Services Agency and comply with rules on asset segregation, cybersecurity, and
anti-money laundering controls.
Following high-profile exchange
failures in past years, Japanese regulators tightened oversight, including
limits on leverage and requirements for cold storage of customer funds.
“Japan has chosen a safety-first
approach,” said a regulatory analyst based in Tokyo. “That reduces risk but
raises barriers for offshore exchanges.”
History
of Enforcement
Japanese authorities have repeatedly
warned unregistered overseas exchanges about soliciting local customers without
approval. In several cases, the Financial Services Agency issued public notices
naming firms it said were operating illegally.
Bybit has previously appeared on
such warning lists, according to regulatory records, though the exchange has
said it complies with laws in jurisdictions where it operates.
The Financial Services Agency
declined to comment on Bybit’s announcement.
Bybit’s
Global Footprint
Bybit is among the largest global
crypto exchanges by trading volume, offering spot and derivatives products to
users in multiple regions. The company is headquartered outside Japan and has
focused recent expansion efforts on markets with clearer licensing pathways.
In a statement, Bybit said it
remains committed to regulatory compliance and will continue to serve users in
other jurisdictions.
“Regulatory alignment is a
priority,” the company said. “We continuously evaluate where we can operate
sustainably.”
Industry
Reaction
The exit drew mixed reactions from
industry participants. Some said it reinforces Japan’s reputation as a
difficult market for foreign crypto firms, while others argued the rules
provide long-term stability.
“Japan is not anti-crypto,” said a
local exchange executive. “It’s pro-regulation. Firms that adapt can succeed,
but the cost is high.”
Several Japan-licensed exchanges
welcomed the move, saying it levels the playing field for firms that invested
heavily in compliance.
Customer
Protection Focus
Japanese regulators have emphasized
protecting retail investors, who make up a significant share of the country’s
crypto user base. Requirements include regular audits, disclosure of risks, and
restrictions on certain high-risk products.
“These rules are designed to prevent
the kind of losses seen elsewhere,” the regulatory analyst said.
Critics argue that strict rules can
limit choice and push users toward less regulated channels, though authorities
dispute that claim.
Broader
Market Implications
Bybit’s departure adds to a pattern
of offshore exchanges scaling back or exiting highly regulated markets. Similar
moves have occurred in Europe and parts of Asia as authorities tighten
oversight.
Analysts said the trend may accelerate consolidation, with fewer but more tightly regulated platforms dominating local markets. “Compliance costs favor larger, well-capitalized players,” said a fintech consultant. “That reshapes competition.”
What
It Means for Japanese Users
For Japanese traders, the exit means
fewer options for accessing global crypto markets, particularly for derivatives
products that are restricted under local rules.
Users may migrate to domestic
exchanges or licensed foreign firms that operate through local subsidiaries. “Choice narrows, but protections
increase,” said the consultant.
Company
Response and Next Steps
Bybit said it will provide customer
support during the transition period and publish detailed instructions for
account closures and withdrawals.
The exchange did not say whether it
plans to seek registration in Japan in the future.
“Re-entry would require meeting all
regulatory requirements,” the company said.