Bybit Resumes Trading in India: A Fresh Start
In a significant development for the Indian cryptocurrency landscape, Bybit has officially resumed its trading services in India after successfully navigating compliance hurdles with the Financial Intelligence Unit (FIU). The exchange made a triumphant announcement on February 25, declaring that it is restoring full access for existing users while gradually onboarding new customers. This reopening signifies a critical regulatory milestone for Bybit after a previous suspension due to compliance issues.
Regulatory Challenges and Financial Penalties
Bybit’s initial suspension came about when the exchange was slapped with a hefty fine of 9.27 crore rupees ($1.06 million) on January 31 for breaching India’s stringent Prevention of Money Laundering Act (PMLA). The Indian government took decisive action upon discovering that Bybit had been expanding its services without the requisite registration. This led not only to regulatory penalties but also to the blocking of its website under the Information Technology Act.
After rectifying these issues by paying the fine and successfully registering with the FIU, Bybit has returned with a renewed commitment to compliance, ensuring it aligns effectively with India’s evolving cryptocurrency regulations. As Bybit seeks to re-establish its presence in India’s burgeoning crypto market, it faces the prospect of increased adoption and trading volumes, even amidst regulatory scrutiny. Industry reports forecast that India’s cryptocurrency market could surge from $2.5 billion in 2024 to over $15 billion by 2035, with an impressive annual growth rate of 18.5%.
The Aftermath of a Massive Security Breach
Bybit’s return to India comes after a troubling period marked by one of the largest security breaches in cryptocurrency history. On February 21, 2025, the exchange fell victim to the notorious Lazarus Group, a cybercriminal organization linked to North Korea. This incident culminated in the theft of more than $1.4 billion in Ethereum (ETH)-related tokens, marking the most significant crypto heist ever recorded.
Investigative efforts revealed that the Lazarus Group exploited loopholes in Bybit’s multi-signature security protocols to gain unauthorized access to an Ethereum cold wallet. The notorious hacking group has a track record of orchestrating high-profile cyber heists, including attacks on other leading exchanges such as Ronin and WazirX, showcasing its ability to breach even the most fortified security measures.
In the wake of the breach, Bybit witnessed dramatic withdrawal activity, with user assets plummeting due to an outflow exceeding $5.3 billion. However, independent audits later reassured the community that Bybit maintained sufficient reserves, surpassing its liabilities. On February 22, in an effort to restore user confidence, Bybit CEO Ben Zhou announced that withdrawal activities had returned to normal.
Rival Exchanges Seek to Re-enter the Indian Market
Bybit is not alone in its quest to regain a foothold in India. Other cryptocurrency exchanges that faced penalties for operating in India are now taking active steps to resume their operations. Reports from February 13 indicate that Coinbase is exploring a comeback after more than a year-long hiatus, currently engaging with local regulators, including the FIU. Although the exchange has yet to confirm its registration with the FIU, a spokesperson emphasized Coinbase’s dedication to complying with India’s regulatory framework.
Coinbase initially ventured into the Indian market in April 2022 but soon faced considerable regulatory pressure from the Reserve Bank of India (RBI), which resulted in a suspension of UPI payments and an eventual halt in services. By September 2023, Coinbase had to officially terminate accounts that did not meet the updated compliance standards. Similarly, Kraken has plans to return to India, recently appointing Vishesh Khurana, co-founder of Shiprocket, as an advisor to lead its local operations.
The Future of Crypto Regulations in India
Despite facing high crypto taxes and numerous regulatory challenges, the current climate in India suggests a potential shift toward more accommodating policies for digital assets. The Securities Exchange Board of India (SEBI) is proposing a multi-regulatory oversight framework and even exploring the possibility of a national Central Bank Digital Currency (CBDC).
Bybit’s re-entry into the Indian market exemplifies the evolving relationship between crypto exchanges and regulators worldwide. As India continues to develop its digital asset framework, exchanges must adapt to changing requirements while striking a balance between innovation and compliance. The outcomes of these transitions over the next few years could determine if India emerges as a leading crypto hub or settles into a more cautious approach concerning digital assets.
Why It Matters
The regulatory comeback of Bybit and the potential return of other exchanges signify a pivotal moment for the Indian cryptocurrency landscape. As the market matures and regulatory frameworks adapt, the outcomes could have profound implications not just for local traders but also for international exchanges looking to tap into the vast potential of the Indian market.
Expert Opinions
Industry experts believe that the Indian market holds immense promise for crypto trading. The growing involvement of younger demographics in the crypto space illustrates a shift in financial management strategies, particularly amid stagnant job growth and wage stagnations. Experts stress that the ability of exchanges like Bybit to maintain compliance and build trust with regulators will be crucial for sustaining growth and innovation in this promising market.
Frequently Asked Questions (FAQs)
How does Bybit plan to maintain compliance in the future? Bybit is committed to ongoing compliance through FIU registration, stringent anti-money laundering measures, and by fostering collaboration with Indian regulators.
How does Bybit’s registration with the FIU affect its global operations? Registration bolsters Bybit’s legitimacy within India, sets compliance standards, and strengthens its credibility as a global crypto exchange.
What is drawing exchanges back to India amid regulatory scrutiny? India’s evolving regulations and the prospect of a national CBDC are seen as enticing factors, encouraging exchanges to adapt and return despite challenges.
What compliance measures are Indian crypto exchanges implementing? Exchanges are focusing on rigorous Know Your Customer (KYC) procedures, Anti-Money Laundering (AML) practices, and ensuring compliance with tax and regulatory frameworks to enhance transparency.
How does Bybit’s fine compare to other exchanges in India? Bybit’s $1.06 million fine appears relatively minor when compared to other penalties, such as Binance’s staggering $85 million tax demand, revealing the varying scales of regulatory penalties.