Étienne Girard
Germany’s BaFin, the Federal Financial Supervisory Authority, has issued a directive preventing Ethena GmbH, a subsidiary of Ethena Labs, from publicly offering its USD-pegged stablecoin, USDe. The regulator cited serious deficiencies in the authorization process, instructing the firm to freeze its USDe asset reserves.
The decision stems from concerns over compliance with Markets in Crypto-Assets (MiCA), the European Union’s regulatory framework governing digital assets. MiCA permits issuers of asset-referenced tokens to continue operations during the authorization process if they applied before July 30, 2024. Ethena GmbH claimed to have submitted its application on July 29, 2024, which should have allowed it to continue offering USDe under a transitional exemption.
BaFin Questions Ethena GmbH’s Compliance
Despite Ethena’s claim, BaFin asserts that the company had already been offering USDe before the regulatory deadline, dating its activity back to June 28, 2024. Furthermore, the agency believes a significant portion of USDe’s 5.4 billion token supply was already available outside Germany before that date.
Additionally, BaFin raised concerns about Ethena’s staked sUSDe token, alleging it was offered as a security without the required securities prospectus in Germany, further complicating the firm’s regulatory standing.
Ethena Labs Responds to BaFin’s Ruling
Following the announcement, Ethena Labs addressed the situation on social media platform X, stating that it had been evaluating multiple regulatory options globally and that MiCA approval was only one of several pathways under consideration.
“We were informed today that Ethena GmbH’s application under the MiCAR regulatory framework will not be approved,” the company stated. “While we are disappointed by this decision, we will continue to evaluate alternative frameworks.”
The company also clarified that no assets have been frozen and that USDe issuance, token minting, and redemptions will continue to operate through Ethena BVI Limited, another subsidiary.
USDe’s Market Standing Remains Strong
Despite the regulatory setback, USDe remains the third-largest USD-pegged stablecoin, following Tether’s USDT and Circle’s USDC, according to PRIME’s Data Dashboard. Ethena Labs’ next regulatory steps will be crucial in determining the long-term viability of USDe in the European market.
