VPN use allowed for mainland Chinese users on Bybit, excluding Chinese Yuan transactions.
Bybit's Struggle with Regulatory Compliance Amidst Rapid Growth
Bybit, a major player in the global cryptocurrency market, has been navigating a challenging regulatory landscape, particularly in relation to its home market, China. Despite the Chinese government's ban on cryptocurrency trading and mining, mainland Chinese users continue to access Bybit and other global marketplaces through unauthorized routes such as peer-to-peer networks and VPNs.
Bybit's growth strategy has been linked to opportunistic moves, such as exploiting the vacuum left by FTX's collapse. However, the platform's reliance on derivatives trading raises concerns, as this carries significant risks for retail investors. Questions remain about whether Bybit's efforts to reapply for a license are aimed at genuine compliance or improving its image.
In spring 2023, Bybit unsuccessfully applied for a Virtual Asset Trading Platform (VATP) license with the Securities and Futures Commission (SFC) of Hong Kong. This application was withdrawn in May due to compliance concerns. Bybit plans to reapply for the license in early 2025, claiming it will address the identified issues.
Bybit's approach to user accessibility and regulatory compliance has been a continuous conflict. The platform blocks mainland IP addresses but allows users to connect via VPNs. This has raised concerns about the broader consequences of defying state rules. Bybit's VPN access also brings more scrutiny, as China's tightening grip on money outflows and cryptocurrency-related activity is expected to bring more scrutiny to Bybit's approach in the near future.
To protect user identity and avoid detection on sensitive platforms, Bybit offers mobile fingerprint emulation. This feature simulates real mobile environments, and when combined with Multilogin, offers a more secure alternative to VPN usage on Bybit. In a bid to attract more users, Bybit began accepting registrations using Chinese national IDs and passports earlier this year.
Despite these efforts, Bybit has reported minimal user growth from mainland China due to its strict prohibition on yuan trading. The platform's growth has been more pronounced globally, with its registered user base tripling from 20 million in 2022 to nearly 60 million this year. Bybit's strategy in the crypto sector emphasizes user accessibility, but the question remains whether this will be sustainable in the face of increasing regulatory scrutiny.
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