Bybit, the world’s second-largest cryptocurrency exchange by trading volume, announced it will pause new user registrations in Japan beginning October 31, 2025.
The decision comes as Japan’s Financial Services Agency (FSA) advances new regulatory reforms for digital assets. In a statement, Bybit called the pause a “proactive compliance measure” to align with the upcoming framework.
It has always been Bybit’s commitment to operate responsibly and in compliance with local laws and regulatory expectations, the exchange said.
Current Japanese users will not be affected, and all existing services will continue operating normally. Bybit plans to release updates once further guidance from regulators becomes available.
Japan’s FSA weighs Bitcoin access for banks
The move follows reports that Japan’s FSA is reviewing reforms that could allow domestic banks to:
- Hold cryptocurrencies like Bitcoin (BTC), and
- Operate licensed digital asset exchanges.
The proposal aims to align crypto assets with traditional instruments such as stocks and government bonds. It is expected to be discussed at an upcoming Financial Services Council meeting, which will also address capital and risk-management standards for banks before allowing digital asset custody.
If approved, the framework could pave the way for institutional Bitcoin adoption within Japan’s highly regulated banking sector.
Regulatory hurdles continue to challenge Japan’s crypto scene
Despite Japan’s reputation as one of the earliest nations to legalize crypto trading, regulatory friction remains a bottleneck for innovation.
In July, Japan’s “slow, prescriptive, and risk-averse” approval culture has driven many crypto startups offshore, even more than the country’s tax regime.
Even if Japan adopts a 20% flat tax on crypto gains, startups will continue to leave unless the approval process becomes faster and more transparent.
The bigger picture
Bybit’s pause underscores how global exchanges are adapting to jurisdiction-specific crypto rules as regulation tightens worldwide.
If Japan’s FSA proceeds with allowing banks to hold Bitcoin, it could mark a historic milestone in institutional crypto adoption bringing digital assets into the heart of Japan’s traditional financial system.
However, the ongoing regulatory caution signals that innovation in Japan may continue to lag behind more agile crypto hubs such as Hong Kong, Singapore, and the UAE.