Bybit Faces Compliance Hurdles With Neobank Push

Bybit’s push to supply neobank-style companies is testing how far crypto exchanges can increase into conventional finance (TradFi), highlighting regulatory hurdles and a rising reliance on licensed banking companions.

Bybit CEO Ben Zhou announced the trade’s push into retail banking on Thursday, with a deliberate February launch of its retail banking product, MyBank. The transfer would mark one of the crucial bold makes an attempt but by a significant trade to supply bank-like companies to retail customers.

As crypto more and more intersects with TradFi, trade observers and executives warned that Bybit’s neobank transfer might set off main challenges because it enters largely uncharted territory for a crypto-native firm in pursuing banking companies.

“The thought of a crypto trade increasing into ‘banking’ is conceptually possible, however in apply extraordinarily complicated from a regulatory perspective,” Gal Arad Cohen, a blockchain lawyer and accomplice on the impartial legislation agency S.Horowitz & Co, advised Cointelegraph.

Bybit financial institution accomplice Pave Financial institution backed by Tether Investments

To supply banking companies, Bybit should both accomplice with a licensed financial institution or get hold of a full banking license, a years-long, capital-intensive course of, Cohen mentioned.

“No main world crypto trade at the moment operates as a totally licensed financial institution within the conventional sense, providing deposit-taking and core banking companies below its personal license,” the lawyer added.

A Bybit spokesperson confirmed to Cointelegraph that the trade is working with Pave Financial institution, a licensed lender based mostly in Georgia, to assist its retail banking providing.

Based in Tbilisi, Georgia, in 2023, Pave Financial institution positions itself as a programmable financial institution for companies, combining crypto and fiat companies. That very same yr, it received a digital banking license from the Nationwide Financial institution of Georgia.

In 2025, Pave Financial institution raised $39 million in a Collection  A funding spherical from main trade gamers, including Tether Investments, the enterprise arm of Tether, which points the world’s largest stablecoin, USDt (USDT).

Trade cautions on trade-offs of full-service banking

The scope of Bybit’s banking ambitions stays a key query for trade observers.

“In the event that they wish to function within the US and search a US banking constitution, which might be stunning to me however is feasible, then they’ll have quite a lot of structuring to do,” Ryne Saxe, co-founder and CEO of stablecoin liquidity infrastructure, Eco, advised Cointelegraph.

Many exchanges, together with Binance, Coinbase and Kraken, have experimented with bank-like options akin to fiat on- and off-ramps, playing cards and cost accounts. However working as a financial institution is a considerably completely different endeavor, mentioned Yuriy Brisov, a lawyer at Digital & Analogue Companions.

“It’s logical that crypto corporations will compete with banks extra straight in 2026–2027,” Brisov mentioned. “Nevertheless, the nearer a platform will get to providing full-service banking, the extra it inherits banking burdens,” he added, referring to capital and liquidity necessities, sanctions enforcement, operational resilience and incident legal responsibility.

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Bybit’s push additionally displays the broader crypto and TradFi convergence. Petr Kozyakov, co-founder and CEO of cost platform Mercuryo, mentioned platforms in crypto are more and more making inroads into TradFi, whereas conventional monetary companies discover crypto. 

Megan Knab, CEO of Franklin, framed the transfer as a part of “embedded finance,” the place customers might finally be abstracted from cumbersome cash motion, with borderless, near-instant funds changing into the norm.

Retail customers might face friction from heavier KYC guidelines

Whereas Bybit’s potential financial institution transfer might simplify fiat-to-crypto transactions, it could additionally current trade-offs for retail customers.

Nick Denisenko, co-founder of digital finance platform Brighty, mentioned the trade’s banking push might “create extra issues than advantages” as it’ll possible introduce heavier Know Your Customer (KYC) procedures.

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“Numerous customers select crypto exchanges, particularly Asian ones, as a result of onboarding is easy and KYC is comparatively gentle in comparison with banks,” Denisenko advised Cointelegraph, including:

“If Bybit goes down this route, it could be the primary main trade to significantly strive it, and I’m undecided that’s what most retail customers are asking for proper now.”

Bybit declined to offer additional particulars to Cointelegraph on the scope of its deliberate neobank push.