Bybit has apparently started providing services in mainland China, which is on the platform's list of excluded jurisdictions. What are the consequences of such a move for the platform? Can other platforms show loyalty to Chinese investors?
Bybit's decision to launch registration and provide access to its offshore crypto exchange to users from mainland China is a risky, albeit potentially profitable, strategic move.
On the one hand, by operating from Dubai, and not directly from China, Bybit technically does not violate local laws prohibiting cryptocurrency activities. This mitigates legal risks for the company. Reputational risks may also be moderate if Bybit maintains proper compliance and KYC procedures.
However, for Chinese users, the risk of violating national legislation when accessing an offshore exchange remains high. In addition, Chinese authorities may well consider such actions by Bybit as a violation of the spirit of their prohibitions on cryptocurrencies.
That said, the opportunity to attract a large customer base from China, which is one of the largest cryptocurrency markets, could be very tempting for Bybit from a commercial point of view. It is likely that other offshore exchanges may also show loyalty to Chinese investors, despite the risks involved.
Ultimately, the business benefits of gaining Chinese users for Bybit may outweigh the potential legal, reputational, and regulatory threats. But the final assessment of the risks and consequences of such a step depends on multiple details, including pushback from the Chinese authorities.