One of the world’s largest cryptocurrency exchanges will no longer accept new Japanese customers starting October 31, 2025.
Bybit, the second-largest cryptocurrency exchange by trading volume, has announced a pause as Japanese financial regulators prepare major changes to the way digital assets are monitored.
The decision affects all new account registrations of Japanese residents and nationals starting at 12:00 UTC on October 31. Current Japanese users can continue to use the platform without any immediate changes to their services.
Bybit says the move allows them to focus on understanding and complying with the new standards set by the Japan Financial Services Agency. The exchange called it a “proactive approach” to working with local regulations.
The major regulatory overhaul in Japan
Japan is making big changes in how it manages cryptocurrencies. In September 2025, the Financial Services Agency proposed moving crypto regulation from the Payment Services Act to the stricter Financial Instruments and Foreign 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 brokerages. This includes stricter rules on how they conduct business and protect their 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 allow banks to hold cryptocurrencies as investments and possibly operate their own crypto exchanges.
Bybit’s checkered history with Japanese regulators
This is not the first time Bybit has come under scrutiny from Japanese authorities. In December 2024, the FSA warned five foreign exchanges, including Bybit, KuCoin, MEXC Global, Bitget and Bitcastle, for operating without proper registration.
The FSA said 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 in case something goes wrong.
Source: Chainwire
Even earlier, in May 2021, the Japanese regulator warned Bybit for letting Japanese residents use its platform despite lacking authorization. The repeated warnings show Japan’s determination to enforce its crypto rules.
Japan’s Growing Crypto Market
The Japanese cryptocurrency market has grown significantly in recent years. As of February 2025, there were more than 12 million crypto accounts in the country, more than triple the number five years earlier. These accounts contain more than 5 trillion yen (around $34 billion) in digital assets.
Around 7.3% of Japanese investors with investment experience now hold cryptocurrencies. That’s more than those who trade currencies or hold corporate bonds. Around 70% of cryptocurrency holders have average incomes.
However, regulators are concerned about retail investors. About 80% of accounts contain less than ¥100,000 (about $670). Officials say many investors rely on unclear or misleading information when choosing which tokens to purchase.
Tax Cuts and Bitcoin ETFs Coming
Japan plans to make crypto more attractive to investors with major tax reforms. The country has proposed lowering the capital gains tax on cryptocurrencies to a flat rate of 20%, matching that on stocks. Currently, crypto profits face progressive tax rates of 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 to Bitcoin and Ethereum exchange-traded funds (ETFs). Market experts expect these products to launch around fiscal 2026. This would give Japanese investors a regulated way to invest in crypto through familiar investment vehicles.
Japan’s finance minister officially approved cryptocurrencies as legitimate investment options in August 2025. Speaking at Asia’s largest Web3 conference, he said that while cryptocurrencies carry volatility risks, proper regulation can make them a valid choice for diversified portfolios.
What this means for crypto in Japan
Bybit’s pause on new Japanese users reflects a broader trend among exchanges to take compliance seriously. The company has introduced similar measures in several countries in 2025 as global regulations tighten.
After suffering a massive $1.5 billion hack in February 2025, Bybit increased its transparency by publishing monthly proof of reserve reports verified by independent auditors. Reports confirmed that the exchange remained fully solvent.
Meanwhile, other players are entering the Japanese market through appropriate channels. In October 2025, PayPay, Japan’s largest digital payments company with 70 million users, purchased a 40% stake in Binance Japan. This partnership connects traditional payment users to regulated crypto trading.
The contrast is clear: exchanges that operate under Japanese rules are growing, while those that operate without registration face increasing pressure.
The road ahead
Bybit has not announced when or if it will begin accepting new Japanese customers again. This likely depends on their ability to properly register with Japanese authorities and meet new regulatory standards being developed.
For Japan’s 12 million crypto users, these changes signal both challenges and opportunities. Stricter rules may limit some options in the short term, but they also promise better investor protections and could attract more institutional money to the market.
