Bybit Permits Mainland Chinese Users to Access via VPN While Prohibiting Yuan Transactions

Bybit, a cryptocurrency exchange based in Dubai, has taken a measured yet assertive approach to accommodate users from mainland China, permitting them to trade on its platform via virtual private networks (VPNs).

Nonetheless, the exchange explicitly prohibits the use of the Chinese yuan in its trading services, ensuring compliance with China’s stringent regulations regarding capital outflow.

As reported by the South China Morning Post, Ben Zhou, co-founder and CEO of Bybit, revealed on December 3 that the exchange started allowing registrations using Chinese national IDs and passports earlier this year, targeting the “overseas Chinese community.”

Zhou clarified that this also allows mainland users to circumvent the country’s cryptocurrency ban by utilizing VPNs, although the exchange restricts direct access from mainland IP addresses.

While this initiative reflects user interest and the company’s evaluation of “acceptable risks,” Bybit has experienced limited growth in new users from mainland China due to its ban on yuan trading.

How Will Chinese Government React To VPN Usage?

The report indicates that this decision represents a careful balance between fulfilling user demand and maintaining regulatory compliance.

Zhou noted that the primary concern of the Chinese government regarding cryptocurrencies is their ability to enable capital outflows, making yuan transactions a regulatory “red line” for the exchange.

“What the Chinese government dislikes the most about crypto is that it can facilitate capital outflow, so we won’t touch this red line.”

Ben Zhou

Despite the regulatory challenges, Zhou emphasized that Bybit’s strategies aim to provide access while respecting the Chinese government’s most sensitive regulations.

Users located in mainland China who wish to trade on Bybit can connect to the platform through a VPN, which conceals their location by utilizing an IP address from another region.

However, Zhou acknowledged that the exchange has not witnessed a substantial increase in users from mainland China, attributing this to the lack of yuan trading.

The company has instead concentrated on expanding its global presence, with its user base increasing from 20 million in 2022 to nearly 60 million this year.

Conflicting Industry Preference: Is VPN Illegal?

Bybit’s strategy illustrates the broader difficulties of operating in areas with intricate cryptocurrency regulations.

Mainland China, once a frontrunner in cryptocurrency adoption, has prohibited commercial crypto activities since 2021.

Despite this ban, Chinese users continue to access cryptocurrency markets through unofficial means, including peer-to-peer trading and VPNs.

At the same time, Bybit is also navigating regulatory environments outside of China.

After briefly pursuing a license under Hong Kong’s regulatory framework earlier this year, the exchange withdrew its application in May due to compliance issues related to a conflict of interest.

Zhou confirmed intentions to reapply for the license in early 2025, highlighting the importance of regulatory approval as a “confidence booster” for attracting talent and demonstrating compliance, even if Hong Kong’s crypto market remains relatively small.

Bybit’s trajectory also underscores its rise as a significant entity in the global cryptocurrency arena.

The exchange was ranked as the third-largest by daily trading volume, positioning itself ahead of Coinbase and only behind Binance.

The platform’s expansion has been driven by its emphasis on derivatives trading and its quick response to market opportunities, such as filling the gap left by FTX’s downfall.

Zhou’s practical approach to VPN usage contrasts with platforms like Coinbase, which have implemented stricter policies against VPN-related activities, citing security concerns.

This issue recently escalated on social media between Coinbase and EthHub co-founder Eric Conner.

Seems like a lazy implementation if that’s the case. There are plenty of better ways to handle this than just nuking my account. Apparently it’s because I had a VPN on when doing the transfer. No warnings or anything?
Check out the replies to my tweets. Seems insanely common

— eric.eth (@econoar) December 2, 2024

PSA: Don’t use a VPN to access Coinbase.
Attackers always use VPN’s, so our risk models take that as a negative sign even if you’re legitimately using your own account.

— Scott Shapiro shapiro.eth (@scottshapiro) December 2, 2024

Bybit, however, views VPNs as an essential tool for mainland Chinese users to access the global cryptocurrency market without engaging in actions that could attract regulatory attention.

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