MiCA not enough: need MiFID II and EMI licenses to turn a profit in Europe — a MiCA license alone cannot enable profitability because derivatives and tokenized assets require MiFID II and EMI permissions.
Bybit is the world’s second-largest cryptocurrency exchange by trading volume. Bybit CEO Ben Zhou said profitability in Europe could be reached within two years, though he added it could take as long as five years.
MiCA grandfathering ends at the end of June, and by July 1 firms must have MiCA authorization to operate across the European Economic Area (EEA). A MiCA license permits operation across the EEA, which comprises the 27 members of the European Union plus Norway, Iceland and Liechtenstein. Under the current MiCA framework, firms can only offer fiat-to-crypto and crypto-to-crypto services. Derivatives and tokenized assets fall outside the MiCA license scope and therefore require separate MiFID II and EMI permissions.
European regulators such as the European Securities and Markets Authority (ESMA) may tighten oversight of crypto products like perpetual futures, and some of those products may not be covered by MiCA rules. National approaches within the EEA vary, with some countries treating MiCA as a way to attract new business and others favouring heavier regulation, producing different levels of strictness. Firms have responded by choosing specific national regulators; Bybit selected Austria’s Financial Market Authority (FMA) as its regulator, a decision Ben Zhou said will pay dividends later.
Market consolidation is expected as smaller firms shut down because of MiCA compliance and additional licensing requirements. Some firms, including Kraken, Bitpanda and Bitvivo, are already profitable in Europe because they hold multiple licenses.
Under the current MiCA framework, firms can offer only fiat-to-crypto and crypto-to-crypto services, which leaves derivatives and tokenized assets outside MiCA’s scope. Derivatives and tokenized assets therefore require separate permissions under MiFID II and electronic money institution (EMI) licensing. Because those profitable product lines fall outside what MiCA permits, a MiCA license alone cannot enable full profitability for exchanges operating in Europe. Firms must secure additional regulatory permissions if they wish to offer a broader set of revenue-generating products.
Ben Zhou said, “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.”
He also 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.”
Zhou additionally observed that “There are many elements of a profitable business you cannot do, so even as a MiCA holder — unless you’re Kraken or Bitpanda or Bitvivo, who are already making money because they have multiple licenses.”
Zhou warned, “There’s going to be market consolidation,” and said that some firms are shutting down because they need MiFID and EMI licences to make money and significant investment in compliance infrastructure to be profitable.
Some firms, including Kraken, Bitpanda and Bitvivo, are already profitable in Europe because they hold multiple licences. Bybit chose Austria’s Financial Market Authority (FMA) as its regulator, a decision Zhou said will pay dividends later.
MiCA’s limited product scope restricts firms to fiat-to-crypto and crypto-to-crypto activities, which constrains direct paths to profitability in the European market. Profitable product lines such as derivatives and tokenized assets require MiFID II and electronic money institution (EMI) authorisations, meaning firms must obtain additional licences and make substantial compliance investments to pursue those revenue streams. Consequently, market consolidation is expected as smaller operators without multiple licences or the resources to scale compliance exit or curtail European operations.
