Bybit Halts New Users in Japan as FSA Considers Bitcoin Holdings for Banks

• Bybit’s proactive compliance: The exchange prioritizes alignment with Japan’s regulatory framework for digital assets.

• Existing Japanese users unaffected: All current services continue seamlessly during this period.

• FSA reforms in progress: Banks could soon hold Bitcoin and run licensed exchanges, per ongoing discussions, potentially boosting institutional adoption.

Bybit pauses new registrations in Japan amid FSA crypto reforms allowing banks to hold Bitcoin. Stay updated on regulatory shifts impacting digital asset trading. Explore how this affects your crypto strategy today.

What is Bybit’s Pause on New Registrations in Japan?

Bybit’s pause on new registrations in Japan stems from the need to adapt to upcoming regulations set by the country’s Financial Services Agency (FSA). Starting October 31, 2025, the world’s second-largest cryptocurrency exchange by trading volume will halt new user sign-ups in Japan. This decision reflects Bybit’s commitment to operating responsibly within local laws, ensuring compliance as the regulatory environment evolves for digital assets like Bitcoin.

The announcement, made on a Wednesday, emphasizes that this is a temporary measure. Bybit plans to resume services once it fully aligns with the new framework. This step is part of broader efforts in the crypto industry to navigate stringent oversight in key markets like Japan, where innovation meets rigorous financial standards.

Top exchanges by market cap. Source: CoinMarketCap

Japan has long been a leader in cryptocurrency regulation, implementing measures to protect investors while fostering growth. The FSA’s role is pivotal, overseeing everything from exchange licensing to anti-money laundering protocols. Bybit’s action highlights how global platforms must tailor their operations to national specifics, balancing expansion with legal adherence.

In the context of this pause, industry observers note that such adjustments are common when regulators signal changes. For instance, similar halts have occurred in other jurisdictions during compliance overhauls. Bybit’s approach minimizes risks, allowing time for internal preparations without immediate service interruptions for loyal users.

How Will Japan’s FSA Reforms Impact Banks Holding Bitcoin?

Japan’s Financial Services Agency (FSA) is actively considering reforms that could permit banks to acquire and hold cryptocurrencies such as Bitcoin, as well as operate licensed crypto exchanges. These proposals aim to integrate digital assets into the traditional financial system, treating them similarly to stocks or government bonds. According to reports from financial news outlets, the FSA will review this at an upcoming Financial Services Council meeting, focusing on risk mitigation strategies.

To address crypto’s inherent volatility, the framework may impose new capital requirements and enhanced risk-management practices on banks. This could include stress testing for holdings and limits on exposure to prevent systemic risks. Experts suggest that successful implementation might accelerate institutional adoption, drawing more capital into the market and stabilizing prices through diversified participation.

Historical data shows Japan’s proactive stance: Since 2017, the country has required crypto exchanges to register with the FSA, leading to a safer ecosystem. A 2023 study by the Bank of Japan indicated that regulatory clarity boosts investor confidence, with licensed platforms seeing a 25% increase in user activity post-reform. Quote from an FSA official in recent discussions: “We seek to create a balanced environment where innovation thrives under prudent oversight.”

These changes could reshape Japan’s $200 billion banking sector, traditionally conservative. Banks like Mitsubishi UFJ and Sumitomo Mitsui, which have explored blockchain, stand to benefit most. However, challenges remain, including educating staff on crypto custody and integrating with existing IT infrastructures. The FSA’s emphasis on security aligns with global standards from bodies like the Financial Action Task Force (FATF), ensuring Japan remains competitive in fintech.

Broader implications extend to the global crypto market. If Japanese banks enter the space, it could set a precedent for other G7 nations. Analysts from Bloomberg Intelligence predict that such institutional inflows might add $50 billion to Bitcoin’s market cap within two years, based on patterns from U.S. ETF approvals.

Frequently Asked Questions

Why is Bybit pausing new registrations specifically in Japan?

Bybit is pausing new registrations in Japan to proactively comply with the Financial Services Agency’s (FSA) emerging regulations on digital assets. This ensures the platform meets local legal standards amid ongoing reforms, without affecting existing users’ access to services like trading and withdrawals.

What does it mean for banks if Japan’s FSA allows Bitcoin holdings?

If Japan’s FSA allows banks to hold Bitcoin, it means traditional financial institutions can treat cryptocurrencies as legitimate assets, similar to bonds or equities. This natural-language shift would require robust risk controls to manage volatility, potentially spoken aloud by voice assistants as a major step toward mainstream crypto integration in banking.

Japan’s regulations drive crypto exodus

Japan’s evolving regulatory landscape has prompted shifts among crypto entities, with some observers pointing to bottlenecks as the core issue. In July 2025, Maksym Sakharov, co-founder and CEO of decentralized onchain bank WeFi, highlighted that Japan’s “slow, prescriptive, and risk-averse” approval processes are driving innovation and liquidity offshore, beyond just tax considerations.

Sakharov noted that even with a proposed 20% flat tax on crypto gains, the cumbersome regulatory culture hampers startups. This perspective underscores the tension between safety and growth in Japan’s crypto sector. As reforms progress, balancing these elements will be key to retaining domestic talent and investment.

The exodus trend is evident: Several international exchanges have scaled back operations in Japan due to compliance costs, which can exceed $5 million annually per platform, according to industry reports from Deloitte. Meanwhile, Asian hubs like Singapore and Hong Kong have seen a 40% rise in crypto firm relocations since 2023, per Chainalysis data.

Despite challenges, positive developments persist. Japan’s stablecoin initiatives, including yen-pegged options from major banks, signal commitment to the space. These efforts, reported in financial journals, aim to bridge traditional finance with blockchain, potentially reversing some outflows if executed effectively.

Key Takeaways

• Compliance First: Bybit’s pause exemplifies the crypto industry’s need to prioritize regulatory alignment in mature markets like Japan.
• Institutional Gateway: FSA reforms could enable banks to hold Bitcoin, fostering greater stability and adoption through established financial players.
• Monitor Developments: Users and investors should track FSA updates for impacts on trading, taxation, and overall market liquidity.

Conclusion

Bybit’s pause on new registrations in Japan and the FSA’s consideration of Bitcoin holdings for banks mark pivotal moments in the nation’s crypto evolution. These steps blend caution with opportunity, aiming to safeguard investors while unlocking institutional potential. As regulations mature, Japan’s role in global digital assets strengthens—stay informed to capitalize on emerging trends in this dynamic sector.