MiCA License Insufficient for Profitability in Europe, Says Bybit CEO

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. 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 these limitations, companies need to obtain additional licenses, including a MiFID II (Markets in Financial Instruments Directive) license and an Electronic Money Institution (EMI) license. According to Zhou, even with a MiCA license, companies can only engage in fiat-to-crypto and crypto-to-crypto transactions, which is not enough to sustain a profitable business. Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe and is relying on its large entity size to absorb the costs. Zhou estimates that it may take around two years for the company to become profitable in the region, depending on when it acquires the necessary licenses. The CEO also predicts market consolidation, as smaller crypto companies may struggle to obtain the required licenses and comply with regulatory requirements. The MiCA grandfathering period is set to end in June, and companies must obtain MiCA authorization to operate across the region by July 1. This deadline is expected to lead to a significant reduction in the number of smaller crypto firms in Europe. Zhou believes that the current regulatory environment is undergoing changes, with some country regulators pushing for stricter control and increased oversight. Bybit has chosen to work with a stringent regulator in Austria's FMA, which Zhou believes will pay off in the long run. The company remains neutral on the potential involvement of the European Securities and Markets Authority (ESMA) in the regulatory process.