The Financial Intelligence Unit of India (FIU-IND) has imposed a monetary penalty of $1.06 million (₹9.27 crore) on Bybit, the world’s second-largest cryptocurrency exchange, for breaching the Prevention of Money Laundering Act (PMLA), 2005.
Bybit operates as a Virtual Digital Asset (VDA) service provider, making it a reporting entity under Indian law.
However, the company continued offering its services in India without obtaining the necessary registration with FIU-IND, as required under the PMLA.
According to a statement from the Ministry of Finance, Bybit failed to comply with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. As a consequence, FIU-IND has blocked the company’s website and ceased its operations under the Information Technology Act, 2000, through the Ministry of Electronics and Information Technology (MEITY).
Despite repeated objections from Bybit, FIU-IND Director Vivek Aggarwal determined that the exchange was liable for multiple violations. His assessment was based on a thorough review of Bybit’s written and oral submissions.
On January 31, the government formally charged Bybit under Section 13 of the PMLA for non-compliance with the law.
This action follows FIU-IND’s earlier announcement on March 10, 2023, introducing compliance guidelines for entities providing Virtual Digital Asset services. These guidelines are aimed at strengthening measures against money laundering (AML) and countering the financing of terrorism (CFT).
Regulatory Challenges and Fine Imposition
India’s Ministry of Finance announced that Bybit had not obtained the required registration as a Virtual Digital Asset Service Provider (VDASP) before expanding its services in the country. Under Section 2(1)(WA) of the PMLA, Bybit is classified as a “reporting entity,” which mandates compliance with India’s anti-money laundering laws.
This fine follows Bybit’s decision to suspend its services in India weeks earlier, citing “recent developments with Indian regulators” and compliance challenges. The FIU subsequently restricted Bybit’s website and halted its operations under the Information Technology Act of 2000.
Bybit’s Compliance Efforts and Future Plans
Despite these challenges, Bybit is working to restore its operations in India. The exchange applied for a VDASP license on June 26, 2024, and expects to obtain full operational approval soon. Vikas Gupta, Bybit’s country manager for India, stated that they anticipate resuming full operations in the coming weeks.
As of February 5, 2025, Bybit has officially registered with the FIU, marking a crucial step toward compliance and legal operations in India. This ensures the exchange adheres to anti-money laundering provisions under the PMLA and can continue serving its Indian users.
Expansion and Market Positioning
Alongside regulatory compliance efforts, Bybit is expanding its offerings. On February 6, 2025, the platform will list Berachain (BERA), a move aimed at strengthening its decentralized finance (DeFi) ecosystem and attracting more developers and investors.
Conclusion
Bybit’s regulatory challenges underscore the importance of compliance in India’s evolving crypto landscape. While facing temporary setbacks, the exchange is taking significant steps to align with local laws. With ongoing compliance efforts and new product offerings, Bybit is positioning itself for a strong return to the Indian market.
Bybit’s failure to adhere to these regulations has now resulted in significant penalties and operational restrictions in India.
