Bybit CEO Claims MiCA License Alone is Insufficient for Profitability in Europe

Acquiring a Markets in Crypto Assets license is a crucial step for operating in Europe, but according to Bybit CEO Ben Zhou, it is not enough to guarantee profitability. 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 significant revenue. To overcome these limitations, companies must also obtain a MiFID II license and an Electronic Money Institution license. Zhou explained that with the current MiCA framework, companies can only facilitate fiat-to-crypto and crypto-to-crypto transactions, which is not sufficient for a profitable business. Even large entities like Bybit, the world's second-largest cryptocurrency exchange by trading volume, are not yet profitable in Europe and are still in the process of acquiring the necessary licenses. The timeline for breaking even in Europe depends on when these licenses are obtained, with Zhou estimating it could take around two years. The crypto market in Europe is on the verge of significant consolidation, particularly with the MiCA grandfathering period coming to an end. This period allowed crypto-asset service providers to operate across the European Economic Area without obtaining a MiCA license, but it will close at the end of June. As a result, many small to medium-sized crypto companies are expected to shut down due to the high costs and regulatory requirements associated with obtaining the necessary licenses. Zhou noted that market consolidation is inevitable, and the closure of smaller firms is a direct result of the stringent regulatory requirements and the need for significant investment in compliance infrastructure. The MiCA regulations are also undergoing changes, with some country regulators pushing for more centralized control and increased oversight. Bybit has chosen to work with Austria's FMA, a stringent regulator, which Zhou believes will pay off in the long run. The company remains neutral on the potential involvement of the European Securities and Markets Authority in the regulatory process, citing both advantages and disadvantages to a more centralized approach.