Ethena Labs Shuts German Branch After MiCA Rejection

Ethena Labs has officially announced the closure of its German branch and EU operations following the rejection of its MiCA compliance application. The firm had been preparing for this withdrawal over the past month.

Ethena Labs has encountered persistent regulatory challenges in Europe. In late March, German authorities denied Ethena’s application for MiCA compliance. At the time, the company suggested that this setback was minor and that it would focus on other markets. However, today's announcement revealed that Ethena GmbH, the German branch, is winding down its operations entirely.

According to a statement from Ethena Labs, the firm has agreed with BaFin to cease all activities of Ethena GmbH and will no longer pursue MiCAR authorization in Germany. All previously whitelisted users who interacted with Ethena GmbH have been onboarded with Ethena (BVI) Limited at their request. Consequently, Ethena GmbH no longer has any direct customers.

The statement also clarified that Ethena GmbH has not conducted any mint or redeem activity since the regulators’ MiCA ruling. Specifically, regulators banned all sales of the USDe stablecoin, imposing significant restrictions on the firm. Ethena (BVI) Limited has taken over the German branch’s users.

The network’s governance token, ENA, has experienced notable price fluctuations around its MiCA efforts. In early March, when Ethena Labs was reportedly on track to receive regulatory approval, ENA broke out of multi-month lows and nearly reached $2.5 billion in market cap. However, since the rejection, ENA has faced continued bearish pressure, exacerbated by macroeconomic conditions across the market. Today’s announcement drove further decline.

MiCA regulations have presented difficulties for several firms besides Ethena. For instance, Tether’s stablecoins were delisted from EU exchanges when MiCA took effect, prompting significant changes to its business. Several other issuers have been racing to fill the gap left by these firms by achieving compliance. Most recently, major centralized exchanges such as Crypto.com and OKX have obtained the license, further strengthening their grasp over the EU market.