Key Takeaways:

• Bybit will phase out services for Japanese residents starting 22 January 2026, with gradual account restrictions.
• Users wrongly flagged as Japanese residents must complete Level 2 KYC before the deadline to avoid losing access to the platform.
• The move follows stricter enforcement by Japan’s Financial Services Agency, including licensing rules and app removals.

Dubai-based cryptocurrency exchange Bybit has confirmed that it will phase out services for users residing in Japan starting January 2026, amid increasing regulatory pressure from Japanese financial authorities. 

The exchange said in a 22 December 2025 announcement that it will introduce progressive restrictions on Japanese accounts to align with local law and consumer-protection standards.

Timeline of changes and user guidance

Bybit said in the official notice that beginning January 22, 2026, accounts identified as belonging to residents of Japan will be gradually restricted and eventually unable to access the platform’s services. 

The company previously stopped onboarding new customers from Japan in October 2025 as part of its compliance adjustment. Any users flagged incorrectly as Japanese residents can complete advanced identity verification, known as Level 2 KYC (which includes proof of address), by the January deadline, and avoid restrictions. Failure to do so would lead to the account being treated as belonging to a Japanese resident. 

Bybit will issue in-app notifications and emails to affected users outlining specific dates and steps for closing open positions, withdrawing assets, and transferring funds. The exchange indicated that the phase-out will be staged rather than abrupt, giving users time to manage their holdings under current terms before full restriction takes effect.

Why Bybit is withdrawing services in Japan

The move comes amid heightened enforcement by Japan’s Financial Services Agency (FSA), which requires crypto platforms serving local residents to register and meet strict operational and consumer-protection requirements. 

Japan’s existing regulations under the Payment Services Act already require registration, segregation of customer assets, and anti-money-laundering (AML) measures. 

The FSA has repeatedly warned Bybit over its lack of a local license and, in February 2025, instructed Apple and Google to suspend the exchange’s mobile app from their Japan stores for non-compliance.

Japan is also preparing changes to its crypto tax regime, including a proposal to replace the current progressive tax system, where crypto gains can be taxed up to 55%, with a flat 20% tax rate, similar to stocks. The reform is being considered as a part of Japan’s 2026 tax overhaul and would apply stricter reporting and compliance standards to crypto assets.

These reforms aim to improve investor protections but increase operational requirements for platforms that wish to operate legally in the country. 

Bybit’s statement highlights that it is “proactively complying” with Japanese regulations and avoids operating where it lacks full authorization. It has not announced any plans to pursue a local license at this time. 

For residents of Japan who use Bybit, the announcement means they must prepare to withdraw assets or transfer them to exchanges that are legally registered in Japan before restrictions intensify in 2026.