Bybit CEO: MiCA License Alone Insufficient for Profitability in Europe

Acquiring a Markets in Crypto Assets (MiCA) license is a crucial step for operating in Europe, but it is not enough on its own to guarantee profitability, as stated by Ben Zhou, the CEO of Bybit, a leading cryptocurrency trading platform. Zhou emphasized that the MiCA license does not cover the full range of products required for profitability, such as derivatives and tokenized assets, which necessitate obtaining a MiFID II license and an Electronic Money Institution (EMI) license. 'With the current MiCA framework, you can only facilitate fiat-to-crypto and crypto-to-crypto transactions,' Zhou explained. 'There are many aspects of a profitable business that you cannot undertake, so even as a MiCA holder, unless you have multiple licenses like Kraken or Bitpanda, it is challenging to generate revenue.' Bybit, the world's second-largest cryptocurrency exchange by trading volume, is still far from breaking even in Europe, with Zhou attributing the timeline to acquiring the necessary licenses. 'We do not generate revenue under the current MiCA license, but as a large entity, we can afford it, viewing it as a long-term investment,' Zhou stated. 'I estimate that we will likely become profitable within two years, although it could take up to five years.' The impending market consolidation is expected to significantly impact small to medium-sized crypto companies in Europe, as the MiCA grandfathering period concludes at the end of June, requiring firms to obtain MiCA authorization by July 1 to operate across the region. 'There will be market consolidation, which is why many smaller firms are shutting down,' Zhou said. 'Even if they can afford MiCA, they realize that they need additional licenses and significant investment in compliance infrastructure to be profitable.' The MiCA regulations are undergoing changes, with some country regulators advocating for stricter control and increased oversight by bodies like the European Securities and Markets Authority (ESMA). Zhou noted that Bybit chose to work with Austria's FMA, a stringent regulator, which will pay off in the long run. Each country interprets MiCA differently, with some being more lenient and others opting for heavy regulation, resulting in varying levels of strictness. Regarding the potential involvement of ESMA, Bybit remains neutral, with Zhou stating that while a more level playing field may be beneficial, it could also lead to increased bureaucracy and decreased efficiency.