Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Acquiring a Markets in Crypto Assets license is a crucial step for operating in Europe, but it is not enough to guarantee profitability, according to Bybit CEO Ben Zhou. In an interview, Zhou noted that the MiCA license does not cover the full range of products required to turn a profit, such as derivatives and tokenized assets, which necessitate a MiFID II license and an Electronic Money Institution license. Zhou explained that with the current MiCA framework, companies are limited to fiat-to-crypto and crypto-to-crypto transactions, restricting their ability to engage in other profitable business activities. Even prominent companies like Bybit, the world's second-largest cryptocurrency exchange by trading volume, are not yet breaking even in Europe and are reliant on acquiring additional licenses to achieve profitability. The timeline for breaking even in Europe is uncertain, with Zhou estimating it could take around two years. He views the MiCA license as a long-term investment for Bybit, enabling the company to operate in the region while it pursues the necessary additional licenses. The impending closure of the MiCA grandfathering period at the end of June marks a critical juncture for small to medium-sized crypto companies in Europe. Firms must obtain MiCA authorization to operate across the region by July 1, a deadline that is expected to lead to market consolidation and the closure of many smaller crypto firms. Zhou anticipates that the need for additional licenses, such as MiFID and EMI, will drive market consolidation, as smaller companies may struggle to afford the necessary investments in compliance infrastructure. The MiCA framework is also undergoing changes, with some regulators advocating for tighter control and increased oversight. The European Securities and Markets Authority has reminded crypto firms that certain products, such as perpetual futures, may fall outside the rules. Bybit has chosen to work with a stringent regulator in Austria's FMA, a decision that Zhou believes will pay dividends in the long run. He noted that each country interprets MiCA differently, resulting in varying levels of strictness. Regarding the potential involvement of ESMA, Zhou expressed neutrality, citing both the potential benefits of a level playing field and the drawbacks of increased bureaucracy and decreased efficiency.