Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Obtaining a Markets in Crypto Assets (MiCA) license is a crucial step for cryptocurrency exchanges operating in Europe, but it is not enough to guarantee profitability, according to Bybit CEO Ben Zhou. In an interview, Zhou emphasized that a MiCA license only allows for fiat-to-crypto and crypto-to-crypto transactions, excluding other essential products like derivatives and tokenized assets that are necessary for a company to turn a profit. To offer these products, companies need to acquire additional licenses, including a MiFID II (Markets in Financial Instruments Directive) license and an Electronic Money Institution (EMI) license. Zhou noted that even Bybit, the world's second-largest cryptocurrency exchange by trading volume, is not yet profitable in Europe and is still in the process of obtaining the necessary licenses. The timeline for breaking even in Europe depends on when the company acquires these licenses, with Zhou estimating it could take around two years. The CEO also predicted market consolidation, as smaller crypto companies may struggle to meet the regulatory requirements and invest in compliance infrastructure. The MiCA license allows a crypto-asset service provider to operate across the European Economic Area (EEA), but the grandfathering period is set to end, and companies must obtain MiCA authorization by July 1. Zhou believes that this deadline will lead to market consolidation, with smaller firms shutting down due to the inability to afford the necessary investments in compliance infrastructure. The regulatory landscape is also evolving, with some country regulators calling for tighter 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. However, the company remains neutral on the potential involvement of the European Securities and Markets Authority (ESMA) in the regulatory process.