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, according to Bybit CEO Ben Zhou. In an interview, Zhou emphasized that 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 revenue. To overcome this, companies need to obtain additional licenses, including a MiFID II license and an Electronic Money Institution (EMI) license. Zhou noted that even with a MiCA license, companies like Bybit are restricted to offering limited services, such as fiat-to-crypto and crypto-to-crypto transactions, which are not sufficient to achieve profitability. As a result, Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still at least two years away from breaking even in Europe. The timeline for achieving profitability depends on when the company acquires the necessary licenses. Zhou views the MiCA license as a long-term investment, stating that the company can afford it due to its size, but smaller companies may struggle to survive due to the high costs associated with obtaining multiple licenses and complying with regulatory requirements. The impending closure of the MiCA grandfathering period at the end of June is expected to lead to market consolidation, as smaller companies may be forced to shut down due to their inability to meet the regulatory requirements. Zhou predicts that the consolidation will lead to a more competitive market, with only a few large players remaining. The MiCA framework is also undergoing changes, with some regulators pushing for stricter control and increased oversight. Bybit has chosen to work with the Austrian regulator, FMA, which Zhou believes will pay off in the long run due to its stringent regulations. However, the company remains neutral on the potential involvement of the European Securities and Markets Authority (ESMA) in the regulatory process.