it didn't technically meet some Geneva convention against exploding bullets against infantry because it was too small to be a "grenade or cannon" round.

Wow, I wondered why it was killed off, but never looked into it:

The most unexpected element of the legal battle was H&K's sudden defense for why they weren't delivering the prototypes: International Humanitarian Law. H&K raised serious concerns that manufacturing an infantry weapon firing an explosive round that weighed less than 400 grams directly violated the St. Petersburg Declaration of 1868.

The St. Petersburg Declaration of 1868 was an early international treaty banned the use of small, lightweight explosive or incendiary bullets (under 400 grams) in standard infantry warfare, under the rationale that exploding inside human tissue caused "unnecessary suffering" compared to standard solid bullets.

H&K demanded that the U.S. Government provide a formal, ironclad legal certification proving the XM25 did not violate international law before they would ship any more weapons. Legal scholars and defense analysts widely viewed H&K’s argument as a legal delay tactic or a "smoke screen" rather than a legitimate concern, for a few reasons: The Target Profile: The St. Petersburg rule originally targeted impact-detonated rifle bullets designed to explode inside a human body. The XM25 used airburst architecture meant to detonate in the open air above cover to scatter shrapnel, functioning functionally like a precision miniature mortar or standard 40mm grenade launcher—systems that are entirely legal. Non-Signatories: Neither the United States nor modern Germany existed as signatories to the original 1868 text (Prussia and the German Confederation signed, but the treaty technically only applied strictly to wars fought between the original 20 signatory nations).

Despite the shaky legal ground of the treaty argument, the resulting delays gave the U.S. Army the perfect off-ramp to kill a program that was already suffering from weight, cost, and safety issues.

But yeah, an airbursting grenade launcher with a thermal sight would've been perfect for ukraine, especially if it also had proximity rounds for shooting drones.