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 enough to guarantee profitability, according to Bybit CEO Ben Zhou. In a recent interview, Zhou noted 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 a company to be profitable. To offer these products, companies need to obtain a MiFID II license and an Electronic Money Institution (EMI) license. Zhou stated that even with a MiCA license, companies can only facilitate fiat-to-crypto and crypto-to-crypto transactions, which restricts their ability to operate 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 achieving profitability depends on when the company acquires the necessary licenses. Zhou described the current situation as a long-term investment for Bybit, saying, 'We don't make money under the current MiCA license. But we're able to afford it because we're a big entity.' The CEO predicts that market consolidation is inevitable, especially with the MiCA grandfathering period coming to an end. This period allows crypto-asset service providers to operate across the European Economic Area (EEA) with a MiCA license issued by one country. However, by July 1, firms must have obtained MiCA authorization to continue operating, which is expected to lead to the closure of many smaller crypto firms. Zhou commented, 'There's going to be market consolidation. That's why these guys are shutting down. Because even if they know they could afford MiCA, they're like, 'I need [MiFID, EMI] to make money, and I need to make a whole lot of investment in compliance infrastructure to be able to be profitable?'' The MiCA framework is undergoing changes, with some regulators pushing for more centralized control and increased oversight. Bybit chose to register with Austria's FMA, a decision that Zhou believes will pay off in the long run. He noted that each country has a different interpretation of MiCA, with some being more lenient and others opting for stricter regulations. Regarding the potential involvement of the European Securities and Markets Authority (ESMA) in regulating the crypto industry, Zhou expressed neutrality, citing both the potential benefits of a level playing field and the drawbacks of increased bureaucracy.