Bybit Faces Internal Panic as Chinese Registration Opens Amid Regulatory Uncertainty

Bybit Opens Registration to Chinese Users, Raising Concerns

Bybit, a major cryptocurrency exchange, has made a surprising move by opening up registration and authentication for users in China.

This decision comes despite China's strict regulations against cryptocurrency trading and Bybit's own history of prohibiting Chinese users.

Bybit's U-turn on China

Previously, Bybit had been very cautious about Chinese users, even going as far as closing accounts registered with Chinese phone numbers and blocking access from Chinese IPs in 2021.

This cautious approach is attributed to the Bybit founding team's background in foreign exchange and their deep understanding of compliance issues.

The sudden reversal has left many confused. Bybit's official website now includes China in its list of supported countries for user verification.

However, Bybit claims this verification is intended for overseas Chinese users, not residents of mainland China. This explanation seems contradictory, as mainland China is explicitly listed.

Motivations and Risks

There's speculation that Bybit's decision is driven by a desire to expand its user base. The potential pool of Chinese users is estimated to be in the tens of millions, a significant market Bybit's competitors already tap into.

Bybit's recent business growth, with its spot business even surpassing its competitor OKX, further fuels this theory.

However, Bybit's move also carries significant risks. The company's terms of service still list China as an excluded jurisdiction.

Additionally, Bybit's previous withdrawal from applying for a Hong Kong license, due to the city's restrictions on businesses operating in mainland China, suggests a potential conflict with their current approach.

Bybit's management team's cautious nature regarding compliance makes this sudden shift all the more puzzling, leading to internal panic among some employees.

Taking Advantage Amid Uncertainties

Whether this is a permanent change or a temporary measure by Bybit remains unclear. The company's lack of internal communication and contradictory statements only add to the confusion.

With China's strict regulations and Bybit's own history of compliance, the future of this new policy for Chinese users is uncertain.

In the meantime, Chinese users are acting fast like wildfire, taking advantage of this opportunity to sign up for an account with the exchange. Chinese X users even shared tips with others on how to sign up.

A X user exclaimed that Hong Kong cards are now permitted for withdrawals and deposits on the platform.

Another shared that she basically got through swiftly using gmail and Taiwan’s VPN.

On the other hand, another advised turning off the VPN to automatically locate China. All domestic information should be filled in, and registration can be completed using either an ID card or passport.

However, there are also Chinese users who are unable to register successfully for unknown reasons.

Shifting Base and Regulatory Concerns

Bybit's recent shift in operations from Singapore to Dubai might be a strategic move to loosen the regulatory grip.

Singapore's stricter regulations could be limiting Bybit's ability to onboard new users, particularly from China.

Dubai, with its less stringent regulatory environment, could offer Bybit more flexibility in managing its global operations.

This flexibility might be particularly attractive for Bybit as it seeks to attract Chinese users.

Chinese User Demand and Workarounds

China has banned cryptocurrency trading for its citizens. However, Chinese users have found workarounds to access Bybit's services.

These workarounds include using VPNs to bypass firewalls and acquiring accounts from other regions.

This persistent demand from Chinese residents highlights the strong interest in cryptocurrency trading within the country, despite the ban.

France and the Regulatory Challenges

Bybit's issues extend beyond China. In France, the Autorité des Marchés Financiers (AMF), the financial markets regulator, has accused Bybit of operating without the necessary license.

This incident exemplifies the fragmented and challenging legal environment for international cryptocurrency exchanges.

As these exchanges operate across various jurisdictions, they must comply with a patchwork of regulations, making it difficult to maintain consistent operations globally.

However, Bybit is not solely focused on dodging regulations.

In an effort to address these challenges and capitalise on market potential, Bybit has expanded its offerings.

One such example is the Bitcoin Wealth Management Fund, which attracted significant interest during its initial offering, selling over 100 BTC in just 7 hours.

This initiative demonstrates Bybit's attempt to not only attract new users but also to cater to existing customers' investment needs.

Bybit's Balancing Act

Bybit's decision to reopen registration for Chinese users amidst these regulatory challenges highlights the complexities and risks involved in global cryptocurrency operations.

The company appears to be engaged in a strategic balancing act. It is attempting to expand its user base, particularly in China, while simultaneously trying to comply with the varying international regulations it faces.

This balancing act might become increasingly difficult for Bybit to maintain as it expands its reach further.