Bybit CEO: 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, says Ben Zhou, CEO of Bybit, a leading cryptocurrency trading platform. In an interview, Zhou explained that MiCA does not cover the full range of products required for profitability, such as derivatives and tokenized assets, which necessitate a MiFID II license and an Electronic Money Institution (EMI) license. With the current MiCA framework, companies are limited to fiat-to-crypto and crypto-to-crypto transactions, which restricts their ability to operate a profitable business, Zhou noted. Even prominent exchanges like Bybit, the world's second-largest cryptocurrency exchange by trading volume, are not yet breaking even in Europe, with profitability expected to take at least two years, depending on the acquisition of necessary licenses. 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 many smaller firms shutting down due to the inability to afford the required licenses and compliance infrastructure. Zhou predicts that market consolidation is inevitable, with many smaller companies unable to afford the necessary investments in compliance infrastructure to become profitable. The MiCA framework is also undergoing changes, with some country regulators pushing for more centralized control and increased oversight by bodies like the European Securities and Markets Authority (ESMA). Bybit's decision to choose a stringent regulator in Austria's FMA is expected to pay dividends in the long run, according to Zhou. The varying interpretations of MiCA by different countries may result in different levels of strictness, with some countries seeking to attract new business and others opting for heavy regulation. Regarding the potential involvement of ESMA, Bybit remains neutral, citing both the potential benefits of a level playing field and the drawbacks of increased bureaucracy and decreased efficiency.