MiCA License Alone Insufficient for Profitability in Europe, Says Bybit CEO

Acquiring a Markets in Crypto Assets (MiCA) license is a crucial step for operating in Europe, but it is not enough on its own to ensure profitability, according to Ben Zhou, CEO of Bybit, a leading cryptocurrency trading platform. In an interview, Zhou emphasized that MiCA does not cover the full spectrum of products necessary for profitability, such as derivatives and tokenized assets, which require additional licenses like MiFID II and Electronic Money Institution (EMI). "With the current MiCA framework, you can only engage in fiat-to-crypto and crypto-to-crypto transactions," Zhou explained. "Many elements of a profitable business are beyond your reach, so even with a MiCA license, unless you have multiple licenses like Kraken, Bitpanda, or Bitvivo, you won't be making money." Even Bybit, the world's second-largest cryptocurrency exchange by trading volume, is not expected to break even in Europe for at least two years, depending on when it secures the necessary licenses. "We don't generate revenue under the current MiCA license, but as a large entity, we can afford it as a long-term investment," Zhou said. "I assume we will be profitable within two years, though it could take up to five years." The upcoming 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 potentially shutting down due to the inability to afford the required investments in compliance infrastructure. "There will be market consolidation," Zhou predicted. "These companies are shutting down because even if they can afford MiCA, they need MiFID and EMI licenses to make money, and that requires a significant investment in compliance infrastructure." MiCA itself is undergoing changes, with some regulators pushing for tighter control and increased oversight. Bybit chose to work with Austria's FMA, a stringent regulator, which Zhou believes will pay off in the long run. The interpretation of MiCA varies by country, with some adopting a more relaxed approach and others opting for heavy regulation. Regarding the potential involvement of the European Securities and Markets Authority (ESMA), Zhou expressed neutrality, citing both the potential benefits of a level playing field and the drawbacks of increased bureaucracy and decreased efficiency.