- Bybit has been fined $1.06 million for PMLA non-compliance
- India blocked Bybit sites pausing the exchange operations in the country
- Bybit is seeking a VDASP license amid compliance confusion
India’s financial watchdog has levied a hefty fine on Bybit, one of the world’s largest crypto exchanges, for failing to adhere to the country’s stringent anti-money laundering (AML) regulations.
According to the country’s Ministry of Finance, the fine amounted to $1.06 million (9.27 crore rupees).
While this move underscores India’s commitment to regulating the burgeoning cryptocurrency market, it leaves Bybit’s compliance status unclear.
Why such a hefty fine?
Bybit’s troubles began when it was found operating without securing mandatory registration under the Prevention of Money Laundering Act (PMLA).
According to the Financial Intelligence Unit (FIU) of India, Bybit is classified as a ‘reporting entity’ due to its services in the digital asset space.
In December 2023, the FIU identified several crypto exchanges for non-compliance with local anti-money laundering laws, but Bybit was not among the listed exchanges.
However, the exchange continued to expand its operations in India without the required registration, prompting the FIU to take action.
Indian authorities, through the Ministry of Electronics and Communication Technology (MEITY), blocked Bybit’s websites under the Information Technology Act 2000, effectively halting Bybit’s operations in India.
However, the suspension came after Bybit had already announced a pause in its services due to “recent developments with Indian regulators,” hinting at prior knowledge of regulatory scrutiny.
Bybit has applied for a VDASP license in India
Amidst these challenges, Bybit has been actively working towards rectifying its status in India. The exchange has applied for a Virtual Digital Asset Service Provider (VDASP) license, aiming to legally operate within India’s crypto market.
This application was completed back on June 26, 2024, indicating a proactive approach to meet regulatory requirements.
Vikas Gupta, Bybit’s country manager for India, expressed optimism about obtaining a full operations license in the coming weeks, suggesting an expectation of smoother regulatory waters ahead.
Initially, there were announcements from Bybit suggesting successful registration and fine settlement, but these were later retracted, leaving the public and stakeholders in limbo regarding the exact compliance status of Bybit in India.
India’s approach indicates a strong push towards ensuring that all financial entities, including those dealing in cryptocurrencies, adhere strictly to anti-money laundering and counter-terrorism financing norms.
Other major exchanges like Binance, KuCoin, and OKX have also faced similar regulatory actions for non-compliance with PMLA and other financial laws.