Key Takeaways
- Ben Zhou, Bybit chief, says MiCA licensing is insufficient for profitability in Europe. According to him, broader revenue streams require additional MiFID II and Electronic Money Institution licenses.
- Zhou estimates that Bybit is two years away from being profitable in Europe and that this depends on obtaining these extra licenses. He adds that a few larger competitors are already earning profits due to broader regulatory permissions.
- MiCA’s July 1 authorization deadline is anticipated to intensify market consolidation, as smaller companies need to pay higher compliance costs. Additionally, national regulatory interpretations vary across Europe.
Europe’s new regime for Markets in Crypto-Assets (MiCA) is transforming how cryptocurrency companies plan their regional business models as authorization deadlines approach across the European Economic Area (EEA) free trade zone.
Ben Zhou, Bybit chief executive, says additional regulatory approvals are needed for the exchange, including MiFID II and EMI licenses, before its European operations can become consistently profitable.
Timeline for Profitability and Strategy for Licensing
As first reported by CoinDesk, Zhou says a MiCA license by itself does not cover sufficient revenue-generating activities for crypto exchanges to run a profitable and sustainable operation in Europe. According to Zhou, MiCA currently allows fiat-to-crypto and crypto-to-crypto services, but not the broader service offering, which includes derivatives and tokenized assets that firms may need to improve their margins.
The Bybit chief says firms also need a MiFID II license and an Electronic Money Institution license to be authorized to offer a more comprehensive suite of services. He says that Bybit, even if it is one of the world’s largest crypto exchanges by trading volume, does not earn money under its current MiCA setup and views Europe as a long-term investment.
Zhou says Bybit is approximately two years away from being profitable in Europe, although when depends on the date the company will be granted the additional licenses. He also mentions that a few larger rivals already earn money because they hold multiple regulatory permissions beyond what the MiCA offers.
Market Consolidation and Compliance Pressure
The regulatory deadline is intensifying pressure on smaller cryptocurrency companies because the MiCA adjustment period ends in late June, with authorization required by July 1 to continue operating across the EEA region. Zhou says this is likely to accelerate market consolidation as smaller firms weigh the additional cost of extra licenses and heavier compliance infrastructure against returns that are not guaranteed.
MiCA is also evolving, with a few national regulators pressuring for tighter and more centralized supervision. This included a larger role for the European Securities and Markets Authority (ESMA). Zhou says countries still apply the framework with different levels of interpretation. He adds that Bybit chose Austria’s FMA as its regulator because a stricter approach could prove beneficial in due time.
On possible greater oversight by the ESMA, Zhou says Bybit is still neutral. He says equal opportunity could help but warns that centralization may also bring more red tape and slower communication compared to dealing directly with a local regulator, such as FMA in Vienna.
