Bybit CEO: MiCA License Insufficient for Profitability in Europe

Securing a Markets in Crypto Assets license is a crucial step for operating in Europe, but according to Bybit CEO Ben Zhou, it is not enough to guarantee profitability. Zhou explained that the MiCA license has limitations, as it does not cover a wide range of products such as derivatives and tokenized assets, which are necessary for a company to be profitable. To offer these products, companies need to obtain a MiFID II license and an Electronic Money Institution license. "With the current MiCA framework, you can only do fiat-to-crypto, crypto-to-crypto," Zhou said. "There are many elements of a profitable business you cannot do, so even as a MiCA holder — unless you're Kraken or BittPanda or Bitvivo, who are already making money because they have multiple licenses." Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe, and the timeline for achieving this goal depends on when the company acquires the necessary licenses. "We don't make money under the current MiCA license. But we're able to afford it because we're a big entity. For us, it's a long-term investment," Zhou said. "It could be five years away, but I think that is a bit long. I would assume we are probably going to be profitable within two years." The MiCA license allows a crypto-asset service provider to operate across the European Economic Area, but the grandfathering period is closing soon, and firms must obtain MiCA authorization by July 1. This deadline is expected to lead to market consolidation, with smaller crypto firms shutting down due to the high costs of compliance and the need for additional licenses. "There's going to be market consolidation," Zhou said. "That's why these guys are shutting down. Because even if they know they could afford MiCA, they're like, 'I need [MiFID, EMI] to make money, and I need to make a whole lot of investment in compliance infrastructure to be able to be profitable?'" The MiCA regulations are also undergoing changes, with some country regulators pushing for stricter control and increased oversight. Bybit chose to register with Austria's FMA, which Zhou believes will pay off in the long run. "Some countries interpret it as a way to attract new business; some want heavy regulation. So you actually have different levels of strictness," he said. Regarding the potential involvement of the European Securities and Markets Authority, Bybit remains neutral. "There are talks about a more level playing field," Zhou said. "But there could be disadvantages. Because when you have a local regulator they are easy to get to. If we have any issues, we just send an email and go to FMA in Vienna. But if everyone's in Paris, then you have to line up. There are more CASPs, increased bureaucracy, decreased efficiency."