Bybit CEO Highlights Limitations of MiCA License for Profitability in Europe

Securing a Markets in Crypto Assets (MiCA) license is a crucial step for operating in Europe, but it is not sufficient on its own to guarantee profitability, according to Bybit CEO Ben Zhou. The current MiCA framework only permits fiat-to-crypto and crypto-to-crypto transactions, excluding essential products like derivatives and tokenized assets that are vital for generating revenue. To offer these services, companies must also obtain a MiFID II license and an Electronic Money Institution (EMI) license. Even major players like Bybit, the world's second-largest cryptocurrency exchange by trading volume, face significant challenges in achieving profitability in Europe. Zhou estimates that it may take around two years for the company to break even, depending on the acquisition of necessary licenses. The impending 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 expire at the end of June. This deadline will likely lead to the closure of many smaller firms, as they struggle to meet the regulatory requirements and invest in compliance infrastructure. Zhou predicts that the industry will experience significant consolidation, with smaller companies shutting down due to the inability to afford the necessary licenses and compliance investments. The MiCA framework itself is undergoing changes, with some regulators advocating for stricter 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 varying interpretations of MiCA across different countries pose a challenge, with some countries adopting a more relaxed approach while others opt for heavy regulation. Regarding the potential involvement of the European Securities and Markets Authority (ESMA) in the regulatory process, Zhou remains neutral, citing both potential benefits and drawbacks. While a more level playing field could be beneficial, it may also lead to increased bureaucracy and decreased efficiency.