Regulatory Compliance Challenges - Bybit is Taking the Hit from Every Side

Cryptocurrency exchange giant ByBit is under water for failing to comply with regulations. The company has received a warning from French financial institutions and will stop providing custody and withdrawal services to users. The exchange is also discontinuing trading services in India due to changing regulatory requirements.

Bybit has already discontinued its operations in France, giving a deadline of 8 January 2025 for users to withdraw funds from their accounts. Similarly, the final date of 12 January will begin to affect trading services, registration of new accounts and sending orders in India.

The Fall of Bybit in France

ByBit has announced the closure of services in 2024, stating:
"In light of recent developments by the French regulator and in continuity with the restrictions previously implemented in the country, we regret to inform you that, as of 8 January 2025, Bybit will no longer provide withdrawal and custody services to citizens or residents of the French Territories."

Here is Bybit's full announcement > Announcement

Following this statement, the exchange has ensured that it will transfer any remaining funds to Coinhouse, a licensed cryptocurrency custodian in France. In order for users to recover their assets, identity verification must be completed.

French users with a verified Coinbase account can expect to see their funds after 16 January 2025, provided that the Bybit and Coinbase account details are identical.

French authorities maintain strict control over cryptocurrency exchanges that operate without the required licences and compliance. In addition, the country's officials have banned cryptocurrency betting platform Polymarket for failing to comply with laws relating to betting on political events.

Bybit Compliance Challenge in India

In the announcement, Bybit stated that its commitment to compliance is the main reason for suspending services in the Indian region. Although trading, creating new accounts and executing orders are affected, users in India can withdraw their funds. Bybit said:
"We have taken this action as we continue to work closely with the regulator to finalise our registration as a Service Provider for Virtual Digital Assets in India, which we expect to achieve in the coming weeks."

It is important to note that the exchange has emphasised that the suspension is temporary, leading users to expect that this decision is aimed at resolving compliance issues before resuming operations.

Following the news, Indian cryptocurrency influencer Berit said:
"Bybit is working on getting a licence and expects to complete the process within a few weeks."

Indian regulations are becoming stricter for cryptocurrency exchanges as Indian authorities have initiated a clampdown over tax compliance issues.

Indian authorities are also expressing interest in banning private coins such as Bitcoin and Ethereum, promoting Central Bank Digital Currencies (CBDC) as a safer alternative.

This is not the first time Bybit has faced problems. In the past, Japanese financial authorities have issued warnings to Bybit and four other exchanges for non-compliance with regulations. These challenges reflect the regulatory pressures faced by cryptocurrency exchanges around the world.

Similarly, Coinbase has withdrawn its operations from Turkey due to compliance issues. KuCoin and Binance also faced similar challenges operating in the country, highlighting the growing pressures in the cryptocurrency sector globally.