Bybit will discontinue services for Japanese residents. The offshore exchange finally capitulated to local regulators Friday, ending a standoff with Japan’s Financial Services Agency (FSA) over registration requirements.
Users in the region now face a complete off-boarding. The platform cited the necessity of complying with local laws, a move that follows repeated warnings from Tokyo’s financial watchdog. The FSA had previously flagged Bybit, along with MEXC and Bitget, for soliciting Japanese investors without a license.
The Compliance Wall
Japan maintains some of the strictest crypto operational standards globally. Exchanges must register with the FSA, segregate customer funds, and hold 100% of user assets in cold wallets. These mandates protect users but crush profit margins for offshore entities reliant on high-leverage derivatives and aggressive lending products.
Bybit’s exit contrasts sharply with competitors. Binance recently re-entered the market by acquiring the regulated local platform Sakura Exchange BitCoin (SEBC). Bybit has chosen withdrawal over the expensive infrastructure required to satisfy Japanese bureaucrats.
Regulatory History
The writing was on the wall. The FSA publicly named Bybit in warnings issued in May 2021 and again in March 2023. Operating in Japan without registration carries criminal penalties for corporate officers. The platform effectively ran out of runway.
Japanese traders now lose access to one of the few remaining deep-liquidity venues for perpetual swaps. Domestic alternatives like bitFlyer or Coincheck offer spot trading but lack the derivative depth found on offshore giants.
