Bybit will begin restricting and forcibly liquidating certain Brazilian business crypto accounts that fail to meet new verification requirements, with forced liquidations and fiat conversions scheduled to start September 21
Bybit is tightening its compliance requirements for Brazilian business users, giving select corporate accounts until August 21 to complete additional verification or face escalating restrictions. According to an announcement from Bybit, business accounts that do not provide the requested supplemental information by the deadline will first lose access to most platform features, and then, starting September 21, may see their remaining positions on restricted products forcibly liquidated at market prices. Unsupported fiat balances will be automatically converted to USDT, and noncompliant bonuses or coupons will be forfeited.
Escalating Restrictions and Liquidations
The new requirements apply only to Brazilian business users who have received a direct request from Bybit to update their Business Verification details. Bybit began sending these notifications via in-app messages and email on August 1. Each affected user must follow the specific deadline in their notification, but no later than August 21 unless otherwise specified by the company. The public notice does not specify the exact cutoff hour, the number of accounts affected, or which products and fiat currencies are considered restricted or unsupported.
After the deadline, noncompliant accounts will be unable to open new positions or access most Bybit services, with the exception of crypto withdrawals and the Convert feature, which will remain available but with limitations. Forced liquidation and automatic conversion will not begin until September 21, providing a one-month window for users to resolve outstanding issues or withdraw assets. Bybit has not disclosed the precise list of affected products or currencies, leaving some uncertainty for impacted businesses.
Regulatory Alignment and Migration
Bybit's move comes as Brazil's central bank implements new rules for virtual asset service providers, including authorization, supervision, and anti-money laundering controls under Resolutions 519, 520, and 521, effective since February 2. Bybit states that its migration and verification process are intended to align with these local requirements, though the company has not publicly confirmed the authorization status of its new Brazilian entity. Starting September 24, eligible Brazilian individual and business users who have completed the necessary checks will be migrated to the Brazil-based entity, with main accounts converted to Standard Accounts offering only locally approved products. Brazilian nationals living abroad can remain on the platform if they provide valid proof of a foreign address.
Fiat services under the new entity will support only the Brazilian real (BRL), and products not permitted under local regulations will remain restricted even for verified users. The migration process is broader than the business-account enforcement, affecting both individual and corporate users who meet compliance standards.
Market Impact and User Risks
Forced liquidations can expose users to market volatility, as positions are closed at prevailing prices rather than user-selected levels. Automatic conversion of unsupported fiat balances to USDT may also result in slippage or unfavorable rates, depending on market conditions at the time of conversion. Bybit's approach reflects a growing trend among exchanges to proactively address regulatory changes in key markets, but the lack of detailed public information may leave some users uncertain about their specific exposure.
Recent industry developments have highlighted the risks of relying on platform assurances or compliance badges. For example, some exchanges have displayed audit badges that failed to prevent major losses, as discussed in this analysis of audit badge effectiveness in crypto security. Users are advised to review their account status and ensure compliance with all verification requests to avoid involuntary asset liquidation or conversion.
According to Bybit's latest public data, the exchange reported over $10 billion in daily trading volume globally as of July 2024, with Brazil representing a growing share of its Latin American user base. The company has not disclosed how many Brazilian business accounts are subject to the new verification process or the total value of assets at risk of forced liquidation.
When exchanges implement forced liquidations due to regulatory or compliance failures, affected users may lose control over the timing and price of asset sales. This can result in realized losses, especially during periods of high volatility or low liquidity. Automatic conversion of fiat balances to stablecoins like USDT may also introduce additional risks, including conversion fees, slippage, and potential exposure to stablecoin depegging events. Businesses operating in regulated markets should closely monitor compliance deadlines and maintain up-to-date verification to minimize the risk of involuntary asset actions by exchanges.
