In a significant regulatory crackdown, the Financial Intelligence Unit-India (FIU-IND) has imposed a substantial penalty of ₹9.3 crore on cryptocurrency exchange Bybit for violations of anti-money laundering regulations. The action comes as part of India’s broader efforts to regulate digital asset platforms operating within its jurisdiction.
The penalty, announced through an order dated January 31st, 2025, stems from Bybit’s continued operation in India without securing mandatory registration with FIU-IND, as required under the Prevention of Money Laundering Act (PMLA). The development marks another major regulatory action in India’s evolving cryptocurrency landscape, particularly affecting the burgeoning digital asset ecosystem in Tamil Nadu.
“The persistent and continuous non-compliance caused FIU-IND to block their websites to stop operations,” stated FIU officials in their announcement. The agency emphasized that the decision came after a thorough examination of both written and oral submissions from the platform.
Rajesh Kumar, a cryptocurrency regulatory expert at Digital Finance Advisory, commented on the development: “This penalty sends a clear message to international crypto platforms that India’s regulatory framework cannot be overlooked. It’s particularly significant for Tamil Nadu’s growing blockchain and crypto startup ecosystem, which needs to align with national compliance standards.”
The violation details reveal multiple breaches of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Specifically, Bybit was found in violation of Section 12(1) of the PMLA, along with various rules concerning reporting requirements and customer due diligence protocols.
The regulatory action follows a broader pattern of enforcement in India’s crypto sector. In March 2023, the government brought cryptocurrency businesses under PMLA provisions, requiring them to report suspicious transactions and maintain strict customer verification processes. The move was followed by mandatory registration requirements for all virtual digital asset service providers with the FIU.
For Tamil Nadu’s technology hub, which has seen significant growth in blockchain and cryptocurrency startups, the implications are far-reaching. Venkatesh Murthy, President of the Tamil Nadu Blockchain Association, notes: “While we support regulatory compliance, this development may initially slow down innovation in the crypto space. However, in the long run, clear regulatory frameworks will attract more legitimate players and institutional investors to Tamil Nadu’s crypto ecosystem.”
The case draws parallels with Binance’s recent compliance journey in India. After receiving similar penalties, Binance paid ₹18.82 crore to FIU and successfully resumed operations after proper registration, demonstrating a path forward for platforms willing to comply with Indian regulations.
Statistics highlight the significance of this regulatory action:
- Nine offshore crypto exchanges received show cause notices in December 2023
- Multiple platforms were delisted from major app stores following regulatory action
- The ₹9.3 crore penalty on Bybit represents one of the larger fines imposed in the sector
The action against Bybit serves as a watershed moment for cryptocurrency regulation in India, particularly impacting Tamil Nadu’s position as an emerging blockchain technology hub. As the digital asset landscape continues to evolve, the emphasis on regulatory compliance is expected to shape the future of cryptocurrency operations in the region.
