Bybit Stops Taking New Japanese Users as Crypto Rules Tighten

One of the world’s largest cryptocurrency exchanges will no longer accept new customers from Japan starting October 31, 2025.

Bybit, the second-largest crypto exchange by trading volume, announced the pause as Japan’s financial regulators prepare major changes to how digital assets are overseen.

The decision affects all new account registrations from Japanese residents and nationals starting at 12:00 PM UTC on October 31. Current Japanese users can continue using the platform without any immediate changes to their services.

Bybit says the move lets them focus on understanding and meeting new standards set by Japan’s Financial Services Agency. The exchange called it a “proactive approach” to working with local regulations.

Japan’s Major Regulatory Overhaul

Japan is making big changes to how it handles cryptocurrency. In September 2025, the Financial Services Agency proposed moving crypto regulation from the Payment Services Act to the stricter Financial Instruments and Exchange Act. This would treat digital assets more like stocks and bonds.

The new framework would require crypto exchanges to follow the same high standards as traditional securities brokers. This includes tougher rules about how they conduct business and protect customers. The changes would also introduce insider trading laws for cryptocurrencies and require better disclosure from token issuers.

The FSA created a new Crypto Assets and Innovation Division in August 2025 to monitor the market and balance regulation with innovation. The agency is also discussing whether to let banks hold cryptocurrencies as investments and possibly operate their own crypto exchanges.

Bybit’s Rocky History with Japanese Regulators

This isn’t the first time Bybit has faced scrutiny from Japanese authorities. In December 2024, the FSA warned five overseas exchanges—including Bybit, KuCoin, MEXC Global, Bitget, and Bitcastle—for operating without proper registration.

The FSA stated that unregistered exchanges lack oversight and put user funds at risk. Under Japanese law, any platform offering crypto services must register with the FSA. Without registration, users have limited legal protection if something goes wrong.

Source: Chainwire

Even earlier, in May 2021, Japan’s regulator warned Bybit for letting Japanese residents use their platform despite lacking permission. The repeated warnings show Japan’s determination to enforce its crypto rules.

Japan’s Growing Crypto Market

Japan’s cryptocurrency market has grown significantly in recent years. As of February 2025, over 12 million crypto accounts existed in the country—more than triple the number from five years earlier. These accounts hold over ¥5 trillion (approximately $34 billion) in digital assets.

About 7.3% of Japanese investors who have investment experience now hold crypto. That’s more than those trading foreign exchange or holding corporate bonds. Around 70% of crypto holders are middle-income earners.

However, regulators worry about retail investors. About 80% of accounts hold less than ¥100,000 (roughly $670). Officials say many investors rely on unclear or misleading information when choosing which tokens to buy.

Tax Cuts and Bitcoin ETFs Coming

Japan is planning to make crypto more attractive for investors through major tax reforms. The country has proposed lowering the capital gains tax on cryptocurrency to a flat 20%, matching the rate for stocks. Currently, crypto profits face progressive tax rates that can reach up to 55%. The proposal, confirmed by the FSA in June 2025, is expected to take effect in fiscal year 2026.

The regulatory changes could also open the door for Bitcoin and Ethereum exchange-traded funds (ETFs). Market experts expect these products to launch around fiscal year 2026. This would give Japanese investors a regulated way to invest in crypto through familiar investment vehicles.

Japan’s Finance Minister officially endorsed cryptocurrencies as legitimate investment options in August 2025. Speaking at Asia’s largest Web3 conference, he said that while crypto carries volatility risks, proper regulation can make it a valid choice for diversified portfolios.

What This Means for Crypto in Japan

Bybit’s pause on new Japanese users reflects a broader trend of exchanges getting serious about compliance. The company has introduced similar measures across multiple countries in 2025 as global regulations tighten.

After suffering a massive $1.5 billion hack in February 2025, Bybit increased transparency by publishing monthly proof-of-reserve reports verified by independent auditors. The reports confirmed the exchange remained fully solvent.

Meanwhile, other players are entering Japan’s market through proper channels. In October 2025, PayPay—Japan’s largest digital payment company with 70 million users—bought a 40% stake in Binance Japan. This partnership connects mainstream payment users with regulated crypto trading.

The contrast is clear: exchanges that work within Japan’s rules are expanding, while those operating without registration face increasing pressure.

The Road Ahead

Bybit hasn’t announced when or if they’ll resume accepting new Japanese customers. That likely depends on whether they pursue proper registration with Japanese authorities and meet the new regulatory standards being developed.

For Japan’s 12 million crypto users, the changes signal both challenges and opportunities. Stricter rules may limit some options in the short term, but they also promise better investor protection and could attract more institutional money to the market.