Japan’s financial watchdog is reviewing major reforms that could let banks hold Bitcoin and run licensed crypto exchanges.
Bybit, one of the world’s largest cryptocurrency exchanges, has temporarily halted new user registrations in Japan starting October 31, 2025, as the company adapts to new digital asset regulations under review by the Financial Services Agency (FSA).
In a statement, the exchange said the pause is part of its “proactive approach” to comply with Japan’s evolving crypto framework, reaffirming its commitment to responsible operations within local laws. Existing users in Japan will not be affected, and all trading and withdrawal functions will remain active while talks with regulators continue.
“It’s better to pause expansion than risk misalignment with a regulatory shift,” said blockchain consultant Kenji Arai, noting that Japan’s FSA has become increasingly assertive in setting compliance standards for global exchanges.
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Japan’s Banks May Soon Hold Bitcoin
The FSA is currently evaluating reforms that could allow banks and financial institutions to own, trade, and custody cryptocurrencies such as Bitcoin, aligning them with traditional assets like stocks and government bonds.
If approved, this would mark one of Japan’s most significant policy shifts since its 2017 crypto licensing framework. “Institutional participation is the missing link in Japan’s crypto economy,” said analyst Mina Kubo. “Allowing banks to hold Bitcoin could normalize digital assets and attract long-term capital.”
However, the agency is also considering new capital and risk-management requirements to offset potential volatility, suggesting that adoption will be gradual and heavily supervised.
Japan’s tightening oversight has prompted several global firms to reassess their local operations, with startups citing bureaucratic delays and high compliance costs as barriers to innovation.
“The challenge isn’t taxation — it’s Japan’s slow and risk-averse approval culture,” said Maksym Sakharov, CEO of a decentralized banking startup.
As global exchanges seek to balance growth with compliance, Bybit’s decision underscores the growing influence of Japan’s regulators in shaping the next phase of the crypto market.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.