Bybit CEO Claims 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 required for profitability, such as derivatives and tokenized assets, which necessitate additional licenses like MiFID II and Electronic Money Institution (EMI). In an interview, Zhou emphasized that even with a MiCA license, companies can only engage in fiat-to-crypto and crypto-to-crypto transactions, excluding other essential elements of a profitable business. As a result, Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe, with profitability expected within two years, contingent upon acquiring the necessary licenses. The impending market consolidation is expected to significantly impact small to medium-sized crypto companies in Europe, as the MiCA grandfathering period is set to expire at the end of June. This deadline will likely lead to the demise of many smaller crypto firms, as they will be required to obtain MiCA authorization to operate across the region by July 1. Zhou anticipates market consolidation, stating that smaller companies are shutting down due to the need for additional licenses and substantial investments in compliance infrastructure to achieve profitability. The MiCA framework itself is undergoing changes, with some country regulators advocating for stricter control and increased oversight by 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 yield long-term benefits. The interpretation of MiCA varies across countries, with some adopting a more relaxed approach to attract new businesses, while others opt for heavier regulation. Regarding the potential involvement of ESMA, Bybit remains neutral, citing both the benefits of a level playing field and the potential drawbacks of increased bureaucracy and decreased efficiency.