Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Acquiring 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 license has limitations, as it does not cover the full spectrum of products required for a company to be profitable, such as derivatives and tokenized assets. To offer these products, companies need to obtain a MiFID II license and an Electronic Money Institution (EMI) license, in addition to the MiCA license. As Zhou explained, "With the current MiCA framework, you can only do fiat-to-crypto, crypto-to-crypto. There are many elements of a profitable business you cannot do, so even as a MiCA holder — unless you're Kraken or BItpanda or Bitvivo, who are already making money because they have multiple licenses." Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe, with Zhou estimating that it could take around two years to achieve profitability, depending on when the company acquires the necessary licenses. The CEO noted that the current MiCA license does not generate revenue for the company, but it is a long-term investment. The upcoming market consolidation is expected to have a significant impact on small to medium-sized crypto companies in Europe, as the MiCA grandfathering period is set to close at the end of June, requiring firms to obtain MiCA authorization to operate across the region by July 1. This deadline is likely to be a major challenge for many smaller crypto firms, leading to market consolidation. Zhou stated, "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 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 CEO expressed a neutral stance on the potential involvement of the European Securities and Markets Authority (ESMA) in the regulatory process, citing both potential advantages and disadvantages.