The popular crypto exchange Bybit is 2nd largest in the world following the fall of FTX due to some fraudulent activities.
Bybit’s coup occurred after the exchange strategically targeted erstwhile FTX users and a burgeoning user base in Europe and Russia. “We recognized the opportunity when FTX collapsed,” stated Ben Zhou, co-founder and CEO of Bybit, alluding to the demise of Sam Bankman-Fried’s once-dominant exchange.
The exchange’s development has also been facilitated by its distinctive margin trading service, which permits using more than 160 tokens as collateral. Zhou emphasized that this was a unique possession. According to Kaiko data, Bybit’s market share has increased twice to 16% since October, surpassing the US leader Coinbase in March. Currently, Bybit is the second-largest player in spot and derivatives transactions, following Binance.
Bybit Experiences a Rebound in Profits
Bybit’s recent success is indicative of the cryptocurrency market’s overall recovery. The introduction of dedicated US exchange-traded funds (ETFs) has significantly contributed to the doubling of the Bitcoin price over the past year. This recovery is a substantial improvement from the 2022 bear market and controversies, which included the FTX collapse.
The crypto exchange has capitalized on this favorable trend by providing innovative features. These cross-margin trading accounts appeal to traders seeking an advantage in the recovering market, enabling them to leverage unrealized profits for new positions.
Europe continues to be Bybit’s most significant market, comprising 30-35% of the total volume. The Commonwealth of Independent States (CIS), with Russia as its primary contributor, accounts for approximately 20%. Nevertheless, Bybit is confronted with obstacles in Russia, where cryptocurrency use is closely monitored due to potential sanctions violations associated with the Ukraine conflict.
The exchange is meticulous in screening Russian clients and guarantees they adhere to sanction regulations. To improve its compliance efforts, Bybit is establishing an office and pursuing a digital-asset license in Georgia, a neighboring country. This follows the acquisition of a permit in Kazakhstan last year.
Bybit’s Strategic Market Transition
Binance’s recent $4.3 billion settlement with US authorities for sanctions and anti-money laundering (AML) violations is concurrent with Bybit’s expansion. The digital asset industry is under increasing regulatory control, as evidenced by the substantial fine and prison time imposed on Binance co-founder Changpeng Zhao.
Bybit, previously referred to as an exchange for international consumers, is adapting to the evolving regulations. Zhou observes that the new Markets in Crypto-Assets Regulation (MiCAR) in Europe restrict certain products, prompting Bybit to pursue new growth opportunities in Brazil, Turkey, and Africa.
The exchange also emphasizes its relationship with prime brokers, critical participants in the crypto market liquidity, by facilitating the connection between institutional traders and exchanges. Bybit announced a “compliance review” of its prime broker interactions in May. Zhou stated, “Now, if you are a prime broker, we must ascertain your clients’ identities.”
