Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Securing a Markets in Crypto Assets (MiCA) license is a crucial step for cryptocurrency trading platforms to operate in Europe, but it is not a guarantee of profitability, according to Ben Zhou, CEO of Bybit, a leading cryptocurrency exchange. In an interview, Zhou emphasized that the MiCA license has limitations, as it does not cover a wide range of products such as derivatives and tokenized assets, which are essential for generating substantial revenue. To overcome these limitations, companies need to obtain additional licenses, including a MiFID II (Markets in Financial Instruments Directive) license and an Electronic Money Institution (EMI) license. Zhou noted that even with a MiCA license, companies can only engage in fiat-to-crypto and crypto-to-crypto transactions, which are not enough to sustain a profitable business. Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still at least two years away from breaking even in Europe, according to Zhou. The timeline for profitability depends on when the company acquires the necessary licenses. Zhou views the MiCA license as a long-term investment, acknowledging that it may take up to five years to generate significant revenue. However, he is optimistic that Bybit will become profitable within two years. The MiCA license allows crypto-asset service providers to operate across the European Economic Area (EEA), which comprises 27 EU member states, as well as Norway, Iceland, and Liechtenstein. 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, as they must obtain MiCA authorization to operate across the region by July 1. This deadline is expected to lead to market consolidation, with smaller firms shutting down due to the high costs associated with obtaining the required licenses and complying with regulatory requirements. Zhou anticipates that the crypto market will undergo significant changes, with some country regulators pushing for stricter, more centralized control and increased oversight from bodies like the European Securities and Markets Authority (ESMA). Bybit has chosen to work with Austria's FMA, a stringent regulator, which Zhou believes will pay off in the long run. He notes that each country interprets MiCA differently, resulting in varying levels of strictness. Regarding the potential involvement of ESMA, Zhou remains neutral, citing both the benefits of a level playing field and the potential drawbacks of increased bureaucracy and decreased efficiency.