Ethena Labs, a prominent player in the blockchain and crypto space, has introduced the closure of its German branch and a full withdrawal from the European Union market due to its failure to secure approval under the EU’s new MiCA (Markets in Crypto-Assets) regulations. The company had previously submitted an application for MiCA compliance, but the German authorities rejected it in late March 2025.

This decision marks a significant shift for Ethena Labs, which has been facing increasing regulatory challenges in Europe. In response to the rejection, the firm has been preparing for its exit, ensuring that users are smoothly transitioned to the company’s other platform, Ethena (BVI) Limited, to avoid disruption.

MiCA Compliance Setback

MiCA, the European Union’s regulatory framework for digital assets, has caused headaches for many crypto firms, including Ethena Labs. The company’s application for MiCA compliance was rejected by German financial regulators, leading to the shutdown of its German operations. In a statement released today, Ethena Labs confirmed that it would no longer be pursuing MiCA authorization in Germany.

“We have agreed with BaFin (the German Federal Financial Supervisory Authority) to wind down all activities of Ethena GmbH and will no longer be pursuing the MiCAR authorization in Germany,” said the firm. Ethena Labs also confirmed that all users previously interacting with its German branch have now been transferred to Ethena (BVI) Limited, the firm’s platform based in the British Virgin Islands.

This regulatory setback follows a ban on sales of the USDe stablecoin by German authorities, which significantly impacted Ethena’s operations. The ban, along with other restrictions, made it impossible for the firm to continue operations in the EU under the current regulations.

Impact on ENA Token

Following the statement of Ethena Labs’ exit from the EU market, the company’s governance token, ENA, experienced a noticeable decline. ENA dropped by over 7% after the news was made public, reflecting investor concerns over the regulatory challenges facing the company. Prior to the MiCA rejection, ENA had seen a strong rally, reaching nearly $2.5 billion in market cap, especially when Ethena was believed to be on track for regulatory approval. However, with the rejection and continued macroeconomic pressure, the token has faced bearish momentum, further exacerbating the price decline.

The Broader Impact of MiCA

Ethena Labs is not the only company affected by MiCA. Several other firms have struggled to meet the stringent requirements of the EU’s new regulations. Notably, Tether’s stablecoins were delisted from EU exchanges after MiCA took effect, highlighting the widespread impact of these regulations on the industry. Many crypto firms, including major centralized exchanges like Crypto.com and OKX, have rushed to obtain MiCA compliance, strengthening their position in the EU market.

For now, Ethena Labs is focusing on expanding its presence in other markets and forming new partnerships to recover from its EU setback. The company has expressed confidence in its ability to continue operating in jurisdictions outside the European Union while navigating the regulatory landscape.

What’s Next for Ethena Labs?

Although the MiCA compliance rejection represents a major challenge for Ethena Labs, the company is not giving up on its global ambitions. By shifting users to the BVI platform and focusing on other markets, the firm aims to stay competitive in the rapidly evolving crypto space.

However, the situation also underscores the growing influence of regulatory bodies on the crypto industry, especially in the EU. As more firms adjust to MiCA and other regulations, Ethena’s experience may be a cautionary tale for others looking to enter or expand in Europe.

The closure of its German operations and withdrawal from the EU market may be a temporary setback, but Ethena Labs is determined to overcome these hurdles and continue its journey in the global crypto landscape.