The cryptocurrency exchange Bybit officially announced that it will discontinue its services for residents of Japan through a phased exit process. Bybit account restrictions will begin to be applied gradually starting in 2026, according to a statement from the platform. This decision responds to the need to align with the increasing regulatory requirements established by the financial authorities of the Asian country.
Kamina Bashir, spokesperson for the organization, confirmed that the measure is part of a proactive effort to comply with local regulations. Users who have been incorrectly identified as Japanese residents have until January 22, 2026, to complete their level 2 identity verification. Otherwise, they will face Bybit account restrictions automatically, losing access to various exchange functions during this transition.
Previously, Japan’s Financial Services Agency (FSA) intensified its scrutiny of exchange platforms operating without the corresponding registration. In February 2025, the regulator requested tech giants such as Apple and Google to remove applications from unregistered exchanges. Among the names mentioned were Bybit, KuCoin, and Bitget, marking the beginning of this strategic withdrawal from the Japanese market.
A stricter regulatory environment redefines the future of the digital ecosystem
Bybit’s exit occurs at a time of great paradox for the cryptocurrency market in Japan. Despite the closures, the country has recorded a 120% growth in on-chain value received between 2024 and 2025. This adoption rate has surpassed other regional powers such as South Korea and Vietnam in the last year. Therefore, the withdrawal represents a significant change in the service offering for millions of investors.
Nevertheless, the Japanese government is implementing a dual-track approach for the digital financial sector. While the integration of Bitcoin into the national grid is encouraged, supervision over asset lending and custody is tightened. Additionally, the reclassification of digital assets as financial products under the Financial Instruments and Exchange Act is expected to bring tax benefits. However, this also implies a much heavier compliance burden for global operators.
Will Japan be able to maintain its growth amid the withdrawal of major international exchanges?
The complexity of tax obligations and volatility remain the primary concerns for resident users. According to recent surveys, a high percentage of investors have left the market due to the difficulty of managing their filings. Therefore, Bybit account restrictions will force local traders to seek national alternatives that fully comply with the FSA. Likewise, competition between registered platforms is expected to intensify over the next two years.
Looking ahead, the industry is closely watching how this gradual withdrawal process will unfold. Bybit is expected to provide detailed remediation steps so that users can withdraw their assets smoothly. On the other hand, the consolidation of the Japanese market under local licenses seems to be the dominant trend for 2027. Finally, the environment suggests that only companies that establish a physical and legal presence in Japan will be able to thrive.
