In a significant shift, Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has announced it will suspend new user registrations from Japan starting October 31, 2025. This move coincides with the Japanese Financial Services Agency’s (FSA) upcoming regulatory changes aimed at tightening the classification of cryptocurrencies.
Bybit Suspends New Registrations for Japanese Users
Bybit, a major player in the cryptocurrency market, will halt the acceptance of new user registrations in Japan effective from 12 PM UTC on October 31. The exchange stated this action is a part of a proactive approach to comply with the evolving legal framework set by Japanese authorities.
As of now, existing users will still maintain full access to all services. Bybit emphasized its commitment to operate “responsibly” in line with local laws and regulatory expectations.
This suspension follows a growing trend of regulatory scrutiny from Japanese authorities, looking to enhance investor protection and transparency in the highly volatile cryptocurrency sector.
FSA to Implement Major Reforms in Cryptocurrency Regulation
The Japanese Financial Services Agency is gearing up for major reforms that may reshape the regulatory landscape for cryptocurrencies in the country. The market has witnessed rapid growth, boasting over 12 million registered accounts by early 2025.
Despite the expansion, the FSA remains cautious about investor exposure, noting that approximately 80% of domestic accounts hold less than 100,000 yen (about $670), raising concerns about the risks to smaller investors relying on limited information.
In an effort to foster responsible innovation, the FSA launched a new “Division of Cryptocurrency Assets and Innovation” in August to oversee the rapidly evolving industry. The agency plans to amend the Financial Instruments and Exchange Act (FIEA) in 2026, reclassifying cryptocurrencies from “means of settlement” to “financial products.” This change would empower regulators to investigate and sanction insider trading and market manipulation related to cryptocurrencies.
Additionally, the FSA is drafting Japan’s first legal definition of insider trading in the cryptocurrency realm, setting the stage for potential penalties.
These developments signal a pivotal step towards aligning Japan’s cryptocurrency oversight with that of its traditional securities markets. Concurrently, discussions are underway to allow banks to hold cryptocurrencies like Bitcoin for investment purposes, a reversal of a 2020 restriction that might enable banks to engage in trading and custodial services under strict risk and capital requirements.
A Challenging Year for Bybit
The suspension of new registrations in Japan marks a challenging chapter for Bybit, which has faced significant turmoil over the past year. In February 2025, the platform experienced a massive hacking incident resulting in $1.5 billion in losses, attributed to the North Korean Lazarus Group.
In response, Bybit ramped up its compliance efforts, implementing monthly proof-of-reserve reports and expanding third-party audits to reassure users and regulators. An independent audit by Hacken later confirmed that Bybit’s reserve ratio remained above 100% post-incident, alleviating client concerns.
Bybit’s increased transparency and regulatory cooperation reflect broader expectations in Japan for cryptocurrency firms. The exchange’s approach aligns closely with the FSA’s emphasis on responsibility, financial stability, and investor protection.
John is a seasoned journalist at The Bothside News, specializing in balanced reporting across news, sports, business, and lifestyle. He believes in presenting multiple perspectives to help readers form informed opinions. His work embodies the publication’s philosophy that truth emerges from examining all sides of every story.
