Bybit CEO Claims 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. 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 offer these products, companies need to obtain a MiFID II license and an Electronic Money Institution (EMI) license, in addition to the MiCA license. According to Zhou, the current MiCA framework only allows for fiat-to-crypto and crypto-to-crypto transactions, which is not sufficient for a profitable business. Even large companies like Bybit, which is the world's second-largest cryptocurrency exchange by trading volume, are not yet profitable in Europe and are still in the process of acquiring the necessary licenses. Zhou estimates that it may take around two years for Bybit to become profitable in Europe, depending on when the company obtains the required licenses. He views the MiCA license as a long-term investment, and the company can afford it due to its size. The MiCA license allows a crypto-asset service provider to operate across the European Economic Area (EEA), which includes all 27 members of the European Union, as well as Norway, Iceland, and Liechtenstein. However, the MiCA grandfathering period is coming to an end, and small to medium-sized crypto companies in Europe are facing a critical juncture. By the end of June, firms must have obtained MiCA authorization to operate across the region, which is expected to lead to market consolidation and the closure of many smaller crypto firms. Zhou predicts that there will be market consolidation, as smaller companies may not be able to afford the necessary investments in compliance infrastructure to become profitable. The MiCA regulations are also undergoing changes, with some country regulators calling for more centralized 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. He notes that each country interprets MiCA differently, with some countries being more lenient and others being stricter. Regarding the potential involvement of the European Securities and Markets Authority (ESMA), Zhou remains neutral, citing both potential advantages and disadvantages.