Ethena Labs Leaves EU Market Over MiCA Compliance Issues

Ethena Labs is officially closing its German branch and EU operations after a previous MiCA application rejection. For the past month, the firm has been preparing to withdraw from this market.

Although the exit was anticipated, ENA reacted notably, with the altcoin falling over 7% after today’s announcement.

Ethena Labs Failed MiCA Effort

Ethena Labs has been facing continued regulatory difficulties in Europe. In late March, German authorities rejected Ethena’s application for MiCA compliance.

At the time, the firm suggested that this was a minor setback and that it would focus on other markets. Today, it announced that its German branch is winding down altogether.

“We have agreed with BaFin to wind down all activities of Ethena GmbH and will no longer be pursuing the MiCAR authorization in Germany. All whitelisted… users previously interacting with Ethena GmbH have at their request been onboarded with Ethena (BVI) Limited instead. As a result, Ethena GmbH no longer has any direct customers,” it claimed.

The statement further claimed that Ethena GmbH, the German branch, “has not conducted any mint or redeem activity” since the regulators’ MiCA ruling.

Specifically, regulators banned all sales of the USDe stablecoin, putting serious restrictions on the firm. In other words, this outcome is fairly expected. Ethena (BVI) Limited has taken over the German branch’s users.

The network’s governance token, ENA, has seen notable price swings 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 mark cap.

However, since the rejection, ENA saw continued bearish pressure, which was exacerbated by the macroeconomic conditions across the market. Today’s announcement drove further decline.

MiCA, the European Union’s new stablecoin regulations, have presented difficulties for several firms besides Ethena. For example, Tether’s stablecoins were delisted from EU exchanges when MiCA took effect, prompting serious 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 achieved the license, further strengthening their grasp over the EU market.