Bybit, the world’s second-largest crypto exchange, will stop new user registrations in Japan on Oct 31. This move aligns with Japan’s upcoming stricter regulations on digital assets. Existing Japanese users are not affected, as Bybit reviews local requirements to ensure future compliance.

Japan’s Financial Services Agency (FSA) is planning significant regulatory changes to enhance investor protection in the crypto market. The proposed reforms include outlawing insider trading in cryptocurrencies, with fines or criminal prosecution for violations. Additionally, crypto may be reclassified as a financial product under the Financial Instruments and Exchange Act (FIEA) in 2026.

The FSA is also considering allowing banks to invest in cryptocurrencies like Bitcoin for investment purposes. This potential rule change would require banks to meet strict capital and risk management standards. It could also pave the way for bank groups to register as licensed crypto exchanges, expanding their services to include digital asset trading and custody.

Japan’s tightening regulations aim to align crypto with traditional finance standards. The FSA is working to prevent the transfer of domestic assets abroad in the event of global exchange collapses. They are also intensifying oversight, establishing a dedicated division to monitor market developments and balance innovation with regulation.

Despite Japan’s growing crypto adoption with over 12 million registered accounts, officials express concerns about retail exposure. Many investors hold small amounts of crypto, and there are worries about reliance on misleading information. The FSA is striving to protect investors while fostering innovation in the rapidly evolving crypto landscape.

Read more at Yahoo Finance: Bybit Suspends New Accounts in Japan as FSA Prepares Stricter Crypto Regulations