Beyond the Ban: How Bybit’s FIU-IND Registration Charts a New Course for Crypto in India 

The successful registration of Bybit Technology Limited, the world’s second-largest cryptocurrency exchange, with India’s Financial Intelligence Unit (FIU-IND) as a Virtual Digital Asset Service Provider (VDASP) marks a pivotal shift in India’s crypto landscape. Guided by Cyril Amarchand Mangaldas (CAM), Bybit’s journey from having its website blocked by Indian authorities to achieving full compliance serves as a critical blueprint for other global exchanges. CAM’s strategy involved a three-pronged approach: liaising with law enforcement to unblock the website, comprehensively realigning Bybit’s KYC/AML protocols and product offerings to meet Indian regulations, and navigating the complex tax landscape, including the pivotal 1% TDS rule.

This milestone signals India’s move from skepticism to structured oversight, legitimizing the market, enhancing investor protection, and creating a level playing field that fosters safer, more transparent, and regulated growth for the entire crypto ecosystem.

Beyond the Ban: How Bybit’s FIU-IND Registration Charts a New Course for Crypto in India 

Keyword-Rich Title: Bybit FIU-IND VDASP Registration: Decoding India’s Crypto Compliance Blueprint for Global Exchanges 

Subheading: Cyril Amarchand Mangaldas’s landmark advisory for Bybit Technology Limited isn’t just a legal win; it’s a masterclass in navigating India’s complex virtual digital asset landscape, signaling a new era of regulated growth and a template for other global VDASPs. 

The announcement that Bybit Technology Limited, the world’s second-largest cryptocurrency exchange by volume, has successfully registered with India’s Financial Intelligence Unit (FIU-IND) as a Virtual Digital Asset Service Provider (VDASP) is more than just a corporate milestone. It is a watershed moment for the entire Indian crypto ecosystem. This successful navigation, guided by the legal prowess of Cyril Amarchand Mangaldas (CAM), represents the most significant case study to date of a major global exchange not just entering, but re-entering the Indian market on the regulator’s terms. 

This story transcends a simple press release. It’s a narrative of regulatory thaw, strategic legal compliance, and a clear signal that India is moving from a posture of skepticism to one of structured oversight. For investors, traders, and other international exchanges watching from the sidelines, the Bybit case provides a critical blueprint for the future of crypto in the world’s fifth-largest economy. 

From Blocked to Registered: Unpacking the Journey 

To appreciate the significance of this achievement, one must understand the context. In late 2023 and early 2024, the Indian government, through the Ministry of Electronics and Information Technology (MeitY), took a firm stance against offshore crypto exchanges that were operating without complying with the country’s anti-money laundering (AML) laws. Websites and application URLs of several prominent platforms, including Bybit, were reportedly blocked for Indian users. 

This action wasn’t a ban on crypto itself, but a forceful application of existing rules. In March 2023, India had brought VDA service providers under the ambit of the Prevention of Money Laundering Act (PMLA), 2002. This mandated that any platform operating in India must register with the FIU-IND, adhere to strict KYC (Know Your Customer) and AML standards, and regularly report suspicious transactions. 

The blocking of Bybit was a consequence of non-compliance with these mandates. Therefore, CAM’s role wasn’t merely about filing paperwork; it was a multi-faceted strategic operation to reverse a restrictive action and achieve full regulatory alignment. 

The CAM Playbook: A Three-Pronged Legal Strategy 

The team at Cyril Amarchand Mangaldas, led by partners Pallavi Singh Rao and Shatrajit Banerji, executed a comprehensive strategy that can be broken down into three critical pillars: 

1. Liaison and Unblocking: Mending Fences with Law Enforcement The first and most immediate hurdle was the blocked website. This required direct and delicate engagement with Indian law enforcement agencies. CAM’s role as a respected intermediary was crucial. They didn’t just represent a client; they facilitated a dialogue between a global entity and Indian authorities, translating regulatory concerns into actionable compliance plans. This step involved demonstrating Bybit’s sincere commitment to operating within the Indian legal framework, which was a prerequisite for even beginning the formal registration process.
2. Regulatory Onboarding: Building a Compliance-First Architecture This was the core of the engagement. CAM guided Bybit through a top-to-bottom realignment of its operations for the Indian market. This involved:

• KYC/AML Overhaul: Advising on and helping implement robust, India-specific KYC protocols that go beyond basic email verification. This likely includes enhanced due diligence, linking to officially valid documents mandated by the RBI (like Aadhaar, PAN), and continuous monitoring of transactions. 

• Product Strategy Realignment: India’s regulatory stance on certain crypto products—like derivatives, margin trading, and lending—remains cautious. CAM’s advice would have been instrumental in tailoring Bybit’s extensive global product suite to fit Indian regulatory expectations, potentially involving the gating or modification of certain high-risk offerings to ensure investor protection. 

• Representation Before FIU-IND: The registration process involves detailed submissions, questioning, and revisions. CAM’s multiple representations before the FIU-IND ensured that Bybit’s application was not only complete but also persuasive, clearly articulating how the platform’s operations would uphold the spirit and letter of the PMLA. 

3. Tax Integration: Navigating India’s Complex Crypto Tax Regime No operational plan in India is complete without a razor-sharp tax strategy. The CAM tax team, led by Partner Kunal Savani, addressed the formidable challenge of aligning Bybit’s global operations with India’s unique and stringent crypto tax laws:

• Income Characterization: Determining whether income from various activities (trading fees, staking rewards, etc.) is classified as business income, capital gains, or from other sources, each with different tax implications. 

• 1% TDS (Tax Deducted at Source): This is arguably the most significant aspect of India’s VDA tax regime. Platforms are legally obligated to deduct a 1% TDS on every transaction above a certain threshold. CAM had to ensure Bybit’s systems were technologically and administratively capable of implementing this seamlessly for millions of Indian users. 

• GST Applicability: Clarifying the applicability of Goods and Services Tax on the platform’s fee-based revenue. Determining the correct tax rate and ensuring compliant invoicing and filing is a critical component of operating legally in India. 

The Ripple Effect: What This Means for India’s Crypto Landscape 

Bybit’s successful registration is a positive signal with far-reaching implications: 

• A Path for Other Exchanges: Other major offshore exchanges that were previously blocked now have a clear, demonstrated pathway to re-enter the Indian market. They can look to the Bybit-CAM case as a de facto blueprint for compliance and engagement. 

• Enhanced Investor Protection: The primary goal of FIU-IND registration is to protect the Indian financial system from misuse. With major platforms complying with KYC and AML norms, the ecosystem becomes safer, more transparent, and less prone to fraudulent activities, benefitting legitimate retail investors. 

• Leveling the Playing Field: This move brings offshore giants under the same regulatory scanner as homegrown Indian exchanges like CoinDCX and WazirX, who have been compliant from the outset. This fosters fair competition where platforms compete on service and technology, not on their ability to circumvent regulation. 

• Legitimacy and Growth: Regulatory clarity is the single biggest catalyst for institutional investment. As the market becomes more regulated, it attracts more serious players, deeper liquidity, and sophisticated financial products, ultimately maturing the entire industry. 

A Look Ahead: The New Era of Indian Crypto 

The work is not done. Registration is the beginning, not the end. For Bybit and other newly registered VDASPs, the challenge now is continuous compliance: meticulous reporting, adapting to evolving regulations, and maintaining open channels with regulators. 

For India, the successful onboarding of a giant like Bybit validates its regulatory approach. It proves that a framework based on transparency, security, and tax compliance can attract major global players without stifling innovation. It moves the conversation away from whether crypto should exist in India to how it should operate responsibly within the economy. 

The collaboration between Cyril Amarchand Mangaldas and Bybit is more than a legal transaction; it’s a foundational case that will be studied for years to come. It marks a decisive step out of the grey areas of the past and into a more secure, structured, and promising future for digital assets in India. For anyone with a stake in this future, the message is clear: the rules are defined, the doors are open, but compliance is no longer optional—it’s the only way forward.