• The next bullish narrative for crypto could be MiCA regulations, which could drive liquidity from traditional markets, Bybit EU co-CEO Georg Harer says.
• Improved regulations could provide guardrails to avoid black swan events like Terra Luna and FTX, thereby limiting volatility.
• Tokenized, 24/7 trading in the crypto market could improve retail exposure to trading tools, Harer said.

The cryptocurrency market is losing momentum and liquidity due to the lack of a bullish catalyst, such as Artificial Intelligence (AI), which is reducing retail and institutional participation. In an exclusive interview with FXStreet, Georg Harer, co-CEO at Bybit EU, says that the Markets in Crypto-Assets (MiCA) regulations, with a hard compliance deadline of July 1, could inject liquidity into the crypto market from traditional fund houses. 

“This is a crucial year because it's a year where the old regulation deadlines run out, and if you wanna be offering crypto services, you need to have a MiCA license,” said Harer.

Harer also focused on how 24/7 trading of tokenized Real World Assets (RWA) on crypto platforms could improve traditional retail exposure to improved trading tools.

Not all is lost for crypto

Crypto market liquidity is drying up amid steady outflows from Bitcoin (BTC) - and Ethereum (ETH) - focused Exchange-Traded Funds (ETFs) and declining retail participation. The outflow is likely directed toward the growing AI narrative, which, as the next chapter of technological evolution, mirrors a dot-com bubble and weighs down on large-wallet crypto investors. 

Georg Harer, co-CEO at Bybit EU, which handles roughly $10 billion in average daily trading volume and has over 85 million registered users globally, states that regulatory clarity in European markets could pave the way for the next crypto rally.

“Crypto is at a low, but of course it's still at a very high level compared to where it was five years or even ten years ago,” said Harer. Adding to the optimism, Harer highlighted the growing adoption of crypto as a payment service in the traditional market. The Bybit crypto debit card, in partnership with Mastercard, includes stablecoin and crypto payments, unlocking real-world utility for Bitcoin holders. 

Regulations are the next bullish chapter for crypto

Crypto service providers in the EU were provided an 18-month “grandfathering” period to comply with the MiCA regulations, which ends on July 1. Crypto service providers are expected to obtain MiCA authorization to continue operating across the EU once applicable transition periods expire. 

Notably, Binance's ability to continue serving certain European markets could depend on the outcome of its licensing process, with its application under review by Greece’s Hellenic Capital Market Commission (HCMC), as previously reported by FXStreet.

Harer anticipates that these strict laws and regulations would limit black swan events like the Terra-LUNA and FTX exchange collapses that led to months of downtrend. At the same time, the increased safety could boost the participation of traditional fund houses like Venture Capitals (VCs), institutional, and other large wallet investors.

In a nutshell, Harrer expects regulations to limit centralized scams in crypto, boost responsibility and credibility among crypto asset service providers, and direct traditional liquidity into digital assets.

Tokenized, 24/7 trading is the only natural way

When asked about tokenized 24/7 trading, Harer offered an optimistic outlook on the evolution of traditional markets. “The whole financial market is a made-up thing, so why would we restrict it?” said Harer. 

Speaking about the benefits for retail users, Harer believes tokenized trading would expose traditional players to better tools on crypto platforms. Furthermore, the flexibility to switch platforms or DeFi protocols, or to hold digital assets in cold wallets, helps level the playing field with institutional investors.