The regulatory difficulties for Bybit in India have come to a head, with the exchange temporarily suspending operations. The Dubai-based company has promised to honor all withdrawal requests, but several other services, including crypto trading and new account openings, are restricted.
In its announcement, Bybit explained the decision was made "due to recent developments from Indian regulators and in continuation of previously implemented restrictions," but stressed that it was striving for "full compliance." It is working closely with regulators and hopes to resume operations soon.
Was India an Important Market for Bybit?
Although Bybit's volumes by country are not public, web traffic data provides some insights into its user base distribution. As of December 2024, Russia was the top country accessing Bybit's website (20-40% according to different sources), with India in the top 5 with 4-6%.
In March 2024, Bybit surpassed Coinbase to become the world’s second-largest cryptocurrency exchange after Binance. The increase in global market share was largely attributed to Binance's lost positions, following its exit from Russia.
Bybit restricts services in the United States, China, Hong Kong, and Singapore.
What Were the Latest Developments in India's Crypto Regulations?
India updated its anti-money laundering regulations in March 2023, requiring crypto exchanges, NFT marketplaces, and wallet providers to monitor suspicious financial activities. These regulations were introduced to give the Financial Intelligence Unit (FIU) oversight over crypto in India, and businesses must now implement mandatory verification processes, such as Know Your Customer (KYC), which were previously not required.
In December 2023, FIU recommended blocking access to nine offshore cryptocurrency exchanges due to non-compliance with the new rules. These exchanges included Binance, KuCoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.
In response to these actions, some exchanges have taken steps to comply with Indian regulations. KuCoin registered with the FIU in March 2024, while Binance registered in May 2024 only to receive a $86 million tax show-cause notice from the tax law enforcement agency.
Despite the regulatory challenges, India continues to lead in global cryptocurrency adoption, ranking first in Chainalysis’ 2024 Global Crypto Adoption Index. It remains an important market for digital asset service providers and crypto exchanges, in particular.
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