Bybit’s Global Expansion Amid Regulatory Hurdles and Security Concerns

Cryptocurrency exchange Bybit is steadily advancing toward securing a full operational license in the United Arab Emirates (UAE), marking a significant milestone in its global expansion strategy. However, its journey has been marred by challenges, including a staggering $1.4 billion hack, one of the largest security breaches in crypto history.

A Critical Milestone in the UAE

Bybit recently received in-principle approval from the UAE’s Securities and Commodities Authority (SCA) to establish itself as a virtual asset platform operator. Announced on February 27, this approval places the exchange in the final stages of obtaining a full operational license.

Once finalized, this license will enable Bybit to provide a comprehensive suite of crypto services to both retail and institutional clients in the region. The achievement stands as a testament to Bybit’s commitment to adhering to regulatory frameworks, strategically positioning itself in jurisdictions that foster digital asset innovations.

A Hack That Shook the Exchange

The timing of Bybit’s regulatory progress in the UAE coincided with an unfortunate security event. Just days after securing the preliminary approval on February 18, the exchange suffered a massive $1.4 billion hack on February 21. This cyberattack stands among the most significant in crypto history, occurring during the transfer of funds between the exchange’s cold and hot wallets.

Despite this setback, Bybit co-founder and CEO Ben Zhou remained resolute in the company’s mission, emphasizing that regulatory approvals such as the one in the UAE are crucial in their pursuit of a secure and transparent crypto trading ecosystem. “Bybit remains dedicated to working hand-in-hand with regulators to foster a compliant and innovative digital asset ecosystem to both retail and institutional investors in the UAE,” Zhou stated.

Expanding Presence in India, Georgia, Kazakhstan, and Turkey

Bybit’s ambitions extend far beyond the UAE, as it actively seeks to capture market share across multiple regions. A key highlight in this global push was its official reentry into India. On February 25, Bybit disclosed that it had successfully registered with Indian government authorities, resuming operations in the country.

This comeback, however, came at a cost. Bybit was required to pay a $1 million penalty imposed by India’s Financial Intelligence Unit (FIU) on January 31. The fine was levied due to the exchange’s violation of India’s Information Technology Act, as it had been operating in the market without the necessary FIU registration.

Beyond India, Bybit is also making strides in Georgia, Kazakhstan, and Turkey, further strengthening its foothold in emerging crypto markets. These regions offer promising regulatory environments that align with Bybit’s vision of global expansion and compliance.

Regulatory Headwinds in the EEA and Malaysia

While Bybit’s expansion efforts have been largely successful, not all jurisdictions have been as welcoming. In late 2024, the exchange announced a temporary restructuring of its operations within the European Economic Area (EEA). This move was a necessary response to European regulatory developments, particularly the implementation of the Markets in Crypto-Assets (MiCA) regulation.

In its statement from December 2024, Bybit acknowledged these regulatory changes, saying, “Bybit has made the difficult but necessary decision to temporarily adjust the availability of its products and services within the EEA.” The company simultaneously revealed that it was working toward securing a MiCA license in Austria, demonstrating its commitment to regaining a stronger presence in Europe.

Encouragingly, Bybit has made progress in overcoming some regulatory hurdles in the region. Notably, France’s Autorité des Marchés Financiers, which had previously blacklisted the exchange in May 2022, recently removed Bybit from its noncompliance list, signaling regulatory improvements.

However, challenges persist elsewhere. In December 2024, Malaysia’s Securities Commission ordered Bybit to cease its operations within the country. The regulator accused the exchange of running an unregistered digital asset exchange, barring it from legally serving Malaysian users.

Looking Forward: Resilience Amid Challenges

Bybit’s journey reflects the volatile and evolving nature of the cryptocurrency industry. While it vigorously expands into promising jurisdictions like the UAE, India, and Kazakhstan, it must also navigate regulatory complexities in regions imposing stricter compliance requirements.

The recent $1.4 billion hack underscores the continuous security risks that crypto platforms face, reinforcing the need for stringent security measures and regulatory oversight. Yet, Bybit’s unwavering commitment to working with regulators suggests that it views compliance not as a hindrance but as a foundation for long-term operational stability.

As the exchange continues to grow, its ability to balance expansion, compliance, and security will determine its standing in the highly competitive and ever-evolving global crypto ecosystem.