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. In an interview, Zhou emphasized that the MiCA framework has limitations, as it only covers a portion of the products needed to turn a profit, such as derivatives and tokenized assets. To offer these products, companies require a MiFID II license and an Electronic Money Institution (EMI) license. Zhou noted that even with a MiCA license, companies can only facilitate fiat-to-crypto and crypto-to-crypto transactions, which is not enough to sustain a profitable business. He cited examples of companies like Kraken, BItpanda, and Bitvivo, which have multiple licenses and are already generating revenue. Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe, according to Zhou. The timeline for achieving profitability depends on acquiring the necessary licenses. "We don't generate revenue under the current MiCA license, but we can afford it because we're a large entity. For us, it's a long-term investment," Zhou said. "I think we'll be profitable within two years, but it could take up to five years." The MiCA license allows crypto-asset service providers to operate across the European Economic Area (EEA), which includes all 27 EU member states, as well as Norway, Iceland, and Liechtenstein. However, the MiCA grandfathering period is set to expire at the end of June, and companies must obtain MiCA authorization to operate across the region by July 1. This deadline is expected to lead to market consolidation, with smaller crypto firms shutting down due to the high costs of compliance and the need for additional licenses. "There will be market consolidation," Zhou said. "These companies are shutting down because they know they need MiFID and EMI licenses to make money, and they need to invest heavily in compliance infrastructure to be profitable." The MiCA framework is also undergoing changes, with some regulators calling for stricter control and increased oversight. The European Securities and Markets Authority (ESMA) recently reminded crypto firms that some structured products, such as perpetual futures, may fall outside the rules. Zhou stated that Bybit chose to register with Austria's FMA, a stringent regulator, which will pay off in the long run. He noted that each country interprets MiCA differently, with some countries being more lenient and others being stricter. Regarding the potential involvement of ESMA, Zhou said that Bybit is neutral. "There are talks about creating a level playing field, but there could be disadvantages," he said. "With a local regulator, it's easy to get in touch and resolve issues. If everyone is regulated by ESMA in Paris, it could lead to increased bureaucracy and decreased efficiency."