Cryptocurrency exchange Bybit has paused new account signups for users in Japan as the country’s regulators gear up for stricter crypto oversight.
Quick Summary – TLDR:
- Bybit stopped new user registrations in Japan starting October 31, 2025, citing compliance with local laws.
- The move comes as Japan’s Financial Services Agency (FSA) prepares to classify crypto as a financial product.
- Existing users remain unaffected and can still access full services.
- The FSA is drafting Japan’s first legal definition of insider trading in crypto and broader reforms.
What Happened?
On October 31, Bybit suspended new user registrations in Japan, applying to both individuals and corporations. The company said the decision is part of a proactive effort to align with evolving regulations laid out by the country’s Financial Services Agency (FSA). Existing users will continue to have full access to all services.
Bybit will stop new user registrations in Japan from October 31 to comply with local regulatory guidelines, prioritizing investor protection. Existing users are unaffected for now, but further restrictions may follow. Bybit previously received warnings from Japan’s Financial…
— Wu Blockchain (@WuBlockchain) October 30, 2025
Bybit Steps Back While Japan Moves Forward on Crypto Regulation
Bybit, currently the second-largest cryptocurrency exchange by trading volume, made the announcement in a public statement, calling it a temporary pause that would allow the company to review local compliance standards.
Bybit added that the suspension will give it time to assess how best to meet the standards being outlined by the FSA. The company also expressed gratitude to its Japanese user base, thanking them for their “understanding and continued support.”
This suspension aligns with Japan’s broader regulatory reforms aimed at improving transparency and investor protection in the crypto sector. The FSA’s upcoming changes represent some of the most sweeping updates to crypto oversight in the country.
Japan’s FSA Eyes a Major Crypto Policy Overhaul
Japan’s FSA is preparing regulatory changes that could reclassify crypto assets as financial products. This would mark a significant shift in how digital assets are governed and would bring them under the same legal treatment as stocks or bonds.
Key developments include:
- A proposal to amend the Financial Instruments and Exchange Act (FIEA) by 2026, giving the FSA authority to crack down on market manipulation and insider trading.
- A working group is currently drafting Japan’s first legal definition of crypto insider trading, covering trades based on non-public data such as token listings or security vulnerabilities.
- The FSA is also considering allowing banks to hold and invest in cryptocurrencies, reversing a 2020 restriction, provided banks meet capital and risk management requirements.
- In April, the agency proposed categorizing digital assets into two types: fundraising-related tokens and decentralized tokens like Bitcoin.
With over 12 million registered crypto accounts and deposits surpassing ¥5 trillion ($34 billion), Japan’s market continues to grow rapidly. Yet, 80% of domestic accounts hold less than ¥100,000 ($670), raising red flags for retail investor exposure.
In response, the FSA has set up a new Crypto Assets and Innovation Division to oversee the sector while encouraging innovation with safety.
Bybit Navigates a Tough Year
The decision to pause new Japanese accounts is just the latest chapter in what has been a challenging year for Bybit.
Back in February 2025, the exchange was hit by a $1.5 billion hack, one of the biggest in crypto history, reportedly orchestrated by North Korea’s Lazarus Group. Since then, Bybit has beefed up its compliance and security protocols.
The company began issuing monthly proof-of-reserve reports and expanded third-party audits to assure both users and regulators. Cybersecurity firm Hacken later confirmed Bybit’s reserve ratio remained above 100%, helping to restore trust.
On a more positive note, Bybit recently became the first exchange to secure a full Virtual Asset Platform Operator license in the UAE, issued by the Securities and Commodities Authority. It also partnered with Thredd to launch a multi-currency crypto-linked debit card program globally.
SQ Magazine’s Takeaway
I see Bybit’s pause in Japan as a smart, if cautious, move. Regulatory environments in crypto are changing fast, and Japan is setting a strong example for the rest of the world. Bybit’s decision not only signals respect for local rules but also helps the company stay ahead of potential penalties. It’s clear Japan wants crypto to grow but under strict, transparent conditions. As users, we should welcome these guardrails. They may slow things down a bit, but they make the space safer for everyone.
