Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Securing a Markets in Crypto Assets (MiCA) license is a crucial step for operating in Europe, but it is not enough to guarantee profitability, according to Bybit CEO Ben Zhou. The MiCA framework has limitations, as it does not cover the full range of products necessary for a company to be profitable, such as derivatives and tokenized assets. To offer these products, companies require a MiFID II license and an Electronic Money Institution (EMI) license. "With the current MiCA framework, you can only do fiat-to-crypto, crypto-to-crypto," Zhou explained. "There are many elements of a profitable business you cannot do, so even as a MiCA holder — unless you're a large entity with multiple licenses, you won't be able to turn a profit." Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still some way off from breaking even in Europe, with its timeline for profitability dependent on acquiring the necessary licenses. Zhou noted, "We don't make money under the current MiCA license. But we're able to afford it because we're a big entity. For us, it's a long-term investment. I would assume we are probably going to be profitable within two years." The crypto industry in Europe is at a critical juncture, with the MiCA grandfathering period set to close at the end of June. This means that 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 potential demise of smaller crypto companies. Zhou predicted, "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 calling for tighter 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 interprets MiCA differently, with some countries taking a more relaxed approach and others opting for heavier regulation. Regarding the potential involvement of the European Securities and Markets Authority (ESMA), Zhou stated that Bybit is neutral, citing the potential benefits of a level playing field but also the potential drawbacks of increased bureaucracy.