Bybit, the world’s second-largest cryptocurrency exchange by trading volume, announced that it will suspend new user registrations in Japan starting October 31, as the country’s Financial Services Agency (FSA) prepares to implement stricter supervision of the cryptocurrency sector.
In a statement on Wednesday, the exchange said the suspension is part of its “proactive approach” to comply with Japan’s evolving regulatory framework for digital assets.
Bybit pauses in Japan: compliance measure or cautionary sign?
According to the exchange, the measure will take effect from 12 pm UTC on October 31, halting new account registrations by Japanese residents and nationals.
“Bybit’s commitment has always been to operate responsibly and in compliance with local laws and regulatory expectations,” the exchange said.
Bybit added that the pause will allow it to “focus its efforts and resources on reviewing local regulatory requirements and evaluating how to better comply with the standards outlined by Japanese authorities in the future.”
Existing Japanese users will not be affected for now, and all current services will remain operational.
They said it will provide further updates as talks with the FSA continue. Bybit also apologized for any inconvenience caused and thanked customers for their “understanding and continued support.”
The decision comes at a critical time for Japan’s crypto industry, as the FSA moves to introduce the most sweeping regulatory changes in years.
The new measures aim to close loopholes in the current framework and strengthen investor protection in a market increasingly dominated by retail traders.
Can exchanges thrive under stricter rules, or is Japan pushing them away?
Among the reforms being considered is a new legal framework to prohibit insider trading in cryptocurrencies, a first in Japan, where such activity is not currently covered by existing law.
A working group within the FSA is drafting detailed definitions of what constitutes insider trading in cryptocurrencies, including transactions carried out using non-public information about token listings or exchange vulnerabilities.
Violations could lead to fines or even criminal prosecution once the amendments are approved.
The FSA also plans to introduce amendments to the Financial Instruments and Exchange Act (FIEA) in 2026, reclassifying cryptocurrencies from a “means of settlement” to a “financial product.”
The change would place digital assets under the same legal treatment as traditional securities such as stocks and bonds, allowing the Securities and Exchange Surveillance Commission (SESC) to investigate and penalize insider trading or market manipulation.
Separately, Japan’s financial watchdog is considering new rules to allow banks to hold cryptocurrencies like Bitcoin for investment purposes, a reversal of a 2020 restriction that banned such holdings over volatility concerns.
Under the new proposal, banks would be able to invest in cryptocurrencies as long as they meet stricter risk and capital management requirements. The same framework could also allow banking groups to register as licensed crypto exchanges, allowing them to offer digital asset trading and custody services to clients.
The broader reform effort reflects Japan’s attempt to place cryptocurrencies under the same regulatory umbrella as traditional finance.
Following several high-profile global currency collapses, including the FTX in 2022, the FSA has been working on measures to prevent domestic assets from being transferred abroad if a foreign currency fails.
Japan balances growth and oversight as crypto accounts surpass 12 million
In recent months, the agency has stepped up its oversight of the sector. In August it established a “Crypto Assets and Innovation Division” to better monitor market developments and balance regulation with innovation.
In April, the FSA also published a discussion paper proposing to classify digital assets into two types: “Commercial/funding cryptoassets”, used for fundraising purposes, and “Non-commercial/non-fundraising cryptoassets”, which include decentralized tokens such as Bitcoin and Ethereum.
Japan’s stricter stance comes as cryptocurrency adoption in the country continues to grow. As of February 2025, more than 12 million crypto accounts were registered in the country, more than triple the number five years ago, with deposits exceeding 5 trillion yen ($34 billion), according to FSA data.
Chainalysis recently reported that Japan saw a 120% year-over-year increase in value received on-chain, placing it among the top Asia-Pacific markets for digital asset adoption.
Still, officials have expressed concern about retail exposure.
About 80% of domestic crypto accounts have less than 100,000 yen ($670), and regulators warn that many investors rely on vague or misleading information in token whitepapers.
The post Bybit suspends new accounts in Japan as FSA prepares stricter crypto regulations appeared first on Criptonoticias.
