Ethena Labs Withdraws From German Market Under Pressure From MiCA Regulation

Event Background

Ethena Labs is a prominent protocol in the decentralized finance (DeFi) space, known for its USDe stablecoin and Internet Bond product. USDe is a synthetic dollar stablecoin that uses a delta-hedging strategy to maintain a stable value, instead of relying on traditional debt collateralization mechanisms. With a market capitalization peaking at over $3 billion in mid-2024, USDe is currently the third-largest stablecoin on the market, behind only USDT and USDC.

However, the MiCA regulatory framework, adopted by the EU to regulate the cryptocurrency market, has imposed strict requirements on stablecoin issuers. MiCA requires companies to have an operating license and comply with security, transparency and risk management standards. Ethena's license application was rejected by the German financial regulator (BaFin) in March 2025, forcing the company to make the decision to withdraw.

Reasons for Ethena's Withdrawal from the German Market

MiCA is designed to protect consumers and ensure financial stability in the EU cryptocurrency market. However, strict licensing and regulatory requirements have made it difficult for many projects, including Ethena, to comply. BaFin banned Ethena from minting and redeeming USDe in Germany, leaving its Ethena GmbH branch unable to continue operations. This reflects a general trend: stablecoins that do not comply with MiCA, such as Tether’s USDT, have also been delisted from many EU exchanges.

Rather than continue pursuing a MiCA license, Ethena has chosen to move all operations and customers to Ethena (BVI) Limited, a legal entity registered in the British Virgin Islands (BVI). This decision reflects Ethena’s preference for markets with more flexible regulatory environments, such as Asia or Latin America, to maintain growth and avoid regulatory hurdles.

In late 2024, Chief Growth Officer Seraphim Czecker, who played a key role in driving Ethena to a $5.9 billion market cap, announced his resignation. His departure may have affected Ethena’s EU expansion strategy, forcing it to reassess its priority markets.

Impact of the Event

For Ethena Labs

• EU Market Loss: The EU is one of the largest cryptocurrency markets in the world. Withdrawal means that Ethena loses a large number of potential users and the opportunity to cooperate with major exchanges such as Crypto.com or OKX, which have obtained MiCA licenses.

• ENA Token Price Movement: Following the announcement, Ethena’s ENA token fell more than 7% on the day, reflecting investor concerns about the project’s long-term prospects. However, the drop was not too severe, indicating that the community still believes in Ethena’s global strategy.

• Focus on Other Markets: Ethena is stepping up its partnerships with projects like World Liberty Financial (linked to the Trump family) and BlackRock’s BUIDL fund, while also launching its new stablecoin UStb. These moves suggest Ethena is looking to strengthen its position in regions outside the EU.

For the Stablecoin Market: Ethena’s withdrawal is part of a larger wave of change in the EU stablecoin market. Competitors such as USDC or PYUSD (PayPal) may take advantage of the opportunity to gain market share. At the same time, new projects are racing to obtain MiCA licenses, creating fierce competition to meet regulatory standards.

For the Crypto Community: Ethena’s decision has sparked a discussion about the viability of synthetic stablecoins in an increasingly regulatory environment. Some on X have suggested that this could be the “beginning of the end” for traditional unbacked stablecoins like USDe. However, these opinions are speculative and should be taken with a grain of salt.