Bybit has made peace with the Financial Intelligence Unit India (FIU-IND), agreeing to its conditions. The agency had initially asked that access to the website be blocked for Indians, after it accused the platform of several misconduct. The agency, a part of the Finance Ministry, mentioned that the crypto exchange violated anti-money laundering rules, slamming a $1 million fine on the exchange.
According to the agency, the exchange had carried out “persistent and continuous” violations of the 2005 Prevention of Money Laundering (Maintenance of Records) Rules. As a Virtual Digital Asset Service Provider (VDASP), the exchange was supposed to report some transactions and services, which it failed to do.
Bybit settles in India amid industry crackdown
According to a post by Bybit on January 12, it announced the suspension of activities to Indian users except withdrawals, citing regulatory issues. The suspension also included its payment cards, with the exchange noting at the time that it was temporary. According to a new update, the exchange mentioned that it had paid a fine, and registered as a VDASP in the country.
The FIU-IND crackdown did not only target Bybit, as it targeted several foreign crypto exchanges operating in the country. The crackdown that started in December 2023, mentioned that these exchanges refused to adhere to the agency’s regulations. Another exchange that was affected included Binance, which also had to pause its operations before it eventually paid a fine of $2.2 million to the agency.
India’s crypto approach is evolving
India has provided little attention to the crypto industry, imposing strict regulations and high taxes from profits on the assets. Exchanges were also obligated to report several users activities including issues related to taxation. Exchanges were also included in the taxation policy, with the Finance Ministry mentioning that local and foreign exchanges owe about 8.24 billion rupees in back taxes.
An issue arose in May 2024, when the Securities and Exchange Board of India mentioned that only government agencies should regulate the crypto industry. The position is in stark contrast to the central bank’s stance that the assets pose a macroeconomic risk. In a February interview with Reuters, Economic Affairs Secretary Ajay Seth mentioned that the country is currently reconsidering its stance on the assets, following larger trends in the world. According to a Chainalysis survey in 2023 and 2024, India led the world in crypto adoption in both years.