China announced in September 2021 that it is banning cryptocurrencies and declared all related transactions to be illegal. However, Bybit recently allowed overseas Chinese users to undergo KYC identity verification, hoping to meet the needs of users.
Cryptocurrency exchange Bybit has long been restricted by China’s strict regulatory stance on the cryptocurrency industry, thus completely prohibiting all Chinese users from registering and using the platform. However, according to a report from Wu Shuo Blockchain yesterday, mainland Chinese ID cards can now pass the platform’s first-level KYC identity verification. As Bybit did not provide advance notice or explanation of this change to its internal staff, it caused some employees to feel uneasy.
A few hours after the official announcement by Bybit, the platform officially responded to the media, stating that it has officially opened up to Chinese users residing overseas, allowing them to open accounts on Bybit and use its services. The company stated in a release that, despite the opportunity to further compete in the intense market, it remains to be seen whether this move will face more regulatory risks from China in the future, as China has not yet lifted the ban on cryptocurrencies. It also remains to be observed whether Chinese users living abroad will be willing to undergo KYC verification, which may require more time to assess.
Bybit Withdraws Hong Kong License Application
In late January of this year, Bybit submitted a virtual asset trading platform license application to the Hong Kong Securities and Futures Commission through its Hong Kong entity, Spark Fintech Limited. However, by May 31, Bybit’s Hong Kong entity and many other exchanges withdrew their license applications in Hong Kong and ceased operations in accordance with regulations.
In March, the Hong Kong Securities and Futures Commission first listed Bybit as a suspicious virtual asset trading platform and classified its cryptographic products as suspicious investment products. The Commission stated that Bybit offers cryptocurrency trading services to Hong Kong investors in multiple jurisdictions, including various futures contracts, options, leveraged tokens, and dual-currency investments, and explicitly stated that no entity under Bybit had obtained a license or registration for “regulated activities” in Hong Kong.
The announcement also specifically pointed out that the bybit.com website is operated by Bybit Fintech Limited in Seychelles, while bybit.com.hk is operated by the Hong Kong entity Spark Fintech Limited, and does not involve the related cryptographic products provided by the former. In summary, the Hong Kong Securities and Futures Commission does not allow local users to use Bybit Global’s derivative products, and after Bybit HK under Spark Fintech Limited obtains a license, it will be able to legally provide specific cryptographic products to Hong Kong users, but it has also withdrawn its license application at present.
At the time when the Hong Kong Securities and Futures Commission included the offshore entity of Bybit on the warning list while the Bybit Hong Kong entity had applied for relevant licenses, it was the first of its kind.
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