TL;DR:
When most investors still view crypto exchanges as "trading tools," Bybit is undergoing a deeper transformation. It is no longer content with being a highly efficient matching platform but aims to become a new type of financial infrastructure spanning crypto assets and traditional finance. This is not just a product line expansion, but a fundamental redefinition of "what the future of exchanges is."
Over the past decade, competition among crypto exchanges has focused intensely on three dimensions. The first is liquidity depth—whichever can provide the thickest order book attracts professional traders. The second is fee competition—lower trading costs make users more willing to choose the platform. The third is derivatives design innovation—the richness of perpetual contracts and leveraged products determines trading volume.
However, this competitive logic has gradually reached its ceiling. Crypto user growth is slowing, and market penetration among mainstream investors remains limited. The contract trading sector has entered a state of intense internal competition, with products from various exchanges becoming increasingly similar. At the same time, global regulators are becoming more sensitive to high-risk derivatives, further restricting exchanges' room for expansion along traditional competitive dimensions.
Bybit's choice is clear: rather than refining within existing dimensions, it is better to directly cross exchange boundaries. CEO Ben Zhou stated in a recent public speech: "We are moving beyond niche crypto services to build a broader financial platform, making crypto a part of everyday financial activities."
Bybit's transformation rests on three mutually reinforcing pillars, each targeting different aspects of traditional finance.
First Pillar: MyBank, Taking Fiat into Its Own Hands
Bybit's planned MyBank service, set to launch in February 2026, may seem simple, but it actually touches the core of the exchange business model. Traditionally, crypto exchanges have merely been "channels" for fiat inflows and outflows—users transfer money in from banks, buy crypto assets, and then transfer out. Funds stay briefly on the exchange with low stickiness.
MyBank changes this logic. Once Bybit can provide:
Its role will no longer be just an entry point to the crypto market, but will become a quasi-financial account itself. Users' daily fund flows can complete cycles within Bybit without needing to leave the platform to interact with banks.
This step carries profound strategic significance. It directly approaches the core domain of traditional banks: retail deposit accounts. Bybit is partnering with financial institutions such as Pave Bank (a licensed bank in Georgia), Qatar National Bank (QNB), and DMZ Finance to advance this service. Ben Zhou even revealed to Bloomberg that Bybit is evaluating entry into the U.S. market and considers a U.S. stock listing a long-term goal, indicating how seriously the company takes its role as financial infrastructure.
Second Pillar: ByCustody, Paving the Way for Institutional Funds
If MyBank targets retail investors, then ByCustody targets institutional clients—the true largest pool of capital.
ByCustody already manages over $5 billion in assets, serving more than 30 professional asset management institutions and over 2,000 institutional clients. This figure is significant because it reflects an industry reality: the next wave of truly large-scale funds will not enter crypto exchanges' hot money pools as retail investors but will demand compliance, segregation, auditing, and a complete risk management framework.
Bybit's strengthening of custody capabilities at this moment is essentially positioning itself ahead of the day when crypto assets are formally included in institutional asset allocation. The company has established a partnership with Zodia Custody (backed by traditional financial giants such as Standard Chartered and Northern Trust) to provide independent asset custody and OTC settlement services. This means institutional investors can trade on Bybit while their assets are held at an independent, regulated custodian—fully meeting institutional investment compliance requirements.
Reference: Bybit and Zodia Custody Partner to Enhance Asset Security
Third Pillar: TradFi Products, Blurring the Boundary Between Crypto and Traditional Finance
In 2022, Bybit first launched traditional finance (TradFi) products on a crypto exchange. Now, it plans to list over 500 trading pairs in Q1 2026, covering stock CFDs, forex, commodities, and indices.
This expansion may seem like merely adding product lines, but it is actually reshaping user mindset. When users can trade both crypto and traditional assets within Bybit, several important shifts will occur:
First, users no longer need to leave the platform for other investments. Stock trading, forex hedging, and commodity allocation can all be completed within a single account. Second, crypto assets automatically become part of an asset portfolio rather than an isolated, alternative market. Third, all assets are priced and traded on the same platform, naturally increasing the relative weight and importance of the crypto market.
Bybit emphasizes that these products are built on global payment networks, connecting to nearly 2,000 local banks and over 58 fiat channels, and has already issued 2.7 million Bybit cards. This is not just a trading feature but a complete payment ecosystem.
Bybit's transformation is not an isolated event. Coinbase is also advancing its "Everything Exchange" vision, recently launching stock trading, prediction markets, and DeFi integration. This indicates a broad industry trend is forming.
The focus of competition among exchanges is shifting from "whose matching engine is faster" and "whose derivatives are deeper" to "who can handle the user's complete financial lifecycle."
This shift also expands the definition of competitors. In the past, Bybit's main competitors were other crypto exchanges. In the future, it will compete directly with:
This means the market size is larger, but competition will also be more intense. Bybit must compete with traditional financial institutions that have century-long histories and vast customer bases. This is no longer an exchange civil war but a financial platform war.
Bybit's entire transformation strategy is built on one premise: regulatory approval. The company has clearly stated that all elements of platform expansion require regulatory authorization and will only be launched after obtaining necessary licenses.
This is not mere formality. MyBank involves bank accounts and cross-border payments, requiring licenses in multiple jurisdictions. TradFi products involve stock and derivatives trading, which have different regulatory frameworks in different countries. ByCustody must comply with custody regulations, especially when handling institutional funds.
In the short term, regulatory uncertainty is an execution risk. In the long term, obtaining regulatory approval could become Bybit's strongest moat. Once MyBank operates across multiple jurisdictions and ByCustody becomes the standard choice for institutional custody, it will become extremely difficult for competitors to replicate these capabilities. Licenses that traditional banks and financial institutions have spent years and billions of dollars obtaining, Bybit is now actively pursuing through its identity as a crypto exchange.
If you are a crypto investor, why should Bybit's transformation attract your attention? There are several reasons:
First, it reflects that crypto assets are moving toward normalization. The next phase of crypto is not about confronting regulation but embedding within it. Bank partnerships, compliance licenses, and institutional-grade services all mean crypto platforms are proactively transforming themselves into forms of finance that regulators can understand. For investors, this reduces regulatory risk but also means the crypto market is leaving its wild phase behind, with crypto assets moving from the gray area toward standardization.
Second, the exchange business model is changing, which will ultimately affect fee structures and service quality. Once exchanges begin generating revenue from bank accounts, payment services, and custody fees, their reliance on trading fees will decrease. This may lead to further escalation of fee wars, but it also means exchanges will have more resources to invest in user experience, security, and innovative products.
Third, this is a signal that the "all-round financial platform" may become the mainstream narrative of the future. If both Bybit and Coinbase are evolving in the same direction, how investors evaluate these companies and how regulators approach them will change accordingly. In the future, the most valuable crypto companies may not be those best at trading coins, but those most resembling financial infrastructure.
Of course, the optimistic vision must be balanced with reality. Bybit faces substantial challenges.
Banking and payment licenses are highly dependent on regulatory friendliness. Regulatory environments vary greatly across countries, and even in the U.S. and EU, policy frameworks continue to evolve. Traditional financial products bring significant legal and compliance costs. Operating stock trading requires securities trading licenses, and providing lending services requires compliance with lending regulations.
Most importantly, once Bybit ventures into banking and institutional asset management, it must assume higher systemic risk responsibilities. User fund security is no longer just a company issue but a financial stability issue.
More bluntly, this is a path of high barriers, slow returns, but extremely high upside. Early investors need sufficient patience to wait for regulatory approvals and endure execution risks. But if Bybit succeeds, it will transform from an exchange into global financial infrastructure, with valuation potential that is difficult to measure.
Bybit's transformation is truly betting not just on products or market share, but on a judgment about the future: crypto assets will not disappear, nor will they exist only in marginal markets, but will integrate into the core of the next-generation financial system.
If this judgment holds true, then:
Bybit's pivot may be precisely the prelude to this structural change. Regulatory approval will be key, and execution capability will be the test. But in any case, this change has already begun and is reshaping the entire crypto industry's self-positioning.
As a retail investor, understanding the implications of this change is not only to judge Bybit itself but also to grasp the future role of crypto assets in the broader financial system.
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What is Custody?
In finance, "Custody" means safekeeping or holding assets.
Simple explanation:
Custody = A third party holds your assets for you
Just like storing valuables in a bank's safe deposit box—the bank does not own your money, but is responsible for safekeeping and ensuring its security. Custody is this concept.
Examples in crypto:
Non-custodial
Custodial
ByCustody is Bybit's "institutional-grade custody service," with the following features:
Why do institutions use Custody?
Large institutions (such as pension funds and insurance companies) have legal requirements: assets must be held by independent, regulated institutions. If assets are held directly on an exchange, and the exchange encounters issues (theft, bankruptcy, regulatory risk), the institution bears responsibility. But if assets are held by an independent custodian, even if the exchange collapses, the assets remain safe.
Impact on retail investors: Retail investors typically cannot use ByCustody because the threshold is too high, usually requiring a minimum of $1 million.