- Bybit was fined $1.06 million for violating the PMLA
- India blocked Bybit sites and halted the exchange’s operations in the country
- Bybit is pursuing a VDASP license amid uncertainty over compliance
India’s financial regulator has levied a substantial fine against Bybit, one of the world’s largest cryptocurrency exchanges, for failing to comply with the country’s anti-money laundering (AML) rules.
According to the Ministry of Finance, the penalty totaled $1.06 million (INR 9.27 million). While the fine underscores India’s commitment to regulating its growing crypto market, it raises questions about Bybit’s compliance status.
Why such a large fine?
Bybit’s troubles began when regulators found the exchange was operating without the mandatory registration required under the Prevention of Money Laundering Act (PMLA).
The Financial Intelligence Unit (FIU) of India classifies entities providing digital asset services as “reporting entities.” As a reporting entity, an exchange must register and follow strict AML procedures.
In December 2023, the FIU identified several offshore exchanges for noncompliance with local AML laws, though Bybit was not initially listed among them. Despite that, Bybit continued expanding services in India without the required registration, prompting the FIU to take action.
Indian authorities, through the Ministry of Electronics and Information Technology (MeitY), blocked Bybit’s websites under the Information Technology Act, 2000, effectively suspending the exchange’s operations in India.
The website blocking followed Bybit’s earlier announcement that it would pause services citing “recent developments with Indian regulators,” suggesting the company anticipated regulatory scrutiny before the suspension.
Bybit applies for a VDASP license in India
Amid these developments, Bybit has taken steps to regularize its status in India. The exchange filed an application for a Virtual Digital Asset Service Provider (VDASP) license in order to operate legally within India’s crypto market.
The application was completed on June 26, 2024, reflecting a proactive approach to meeting regulatory requirements.
Vikas Gupta, Bybit’s country manager for India, has expressed optimism that the platform will secure a full operating license in the coming weeks, signaling an expectation of smoother regulatory conditions ahead.
Earlier communications from Bybit suggested it had resolved registration issues and settled penalties, but those statements were later retracted, leaving customers and stakeholders uncertain about the exchange’s exact compliance status in India.
India’s actions demonstrate a firm drive to ensure all financial entities — including crypto platforms — adhere to AML and counter-terrorism financing rules. Major exchanges such as Binance, KuCoin and OKX have faced similar regulatory scrutiny for PMLA and other financial law violations, illustrating broader enforcement across the industry.