Regulator halts Ethena’s USDe stablecoin offering in Germany over concerns

The German financial supervisory agency Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin, stopped the Frankfurt-based Ethena Labs subsidiary Ethena GmbH from publicly offering its USD-pegged stablecoin USDe. 

The halt was due to BaFin identifying "serious deficiencies in Ethena GmbH 's USDe token authorization," instructing Ethena GmbH to freeze its USDe asset reserve, according to a German release translated into English. 

The "token authorization process" refers to how cryptocurrency issuers can offer assets under the European Union's digital asset legal framework, Markets in Crypto-Assets (MiCA), also called "MiCAR."

As the MiCA legal text states: "Issuers of asset-referenced tokens other than credit institutions that issued asset-referenced tokens in accordance with applicable law before 30 June 2024, may continue to do so until they are granted or refused an authorisation pursuant to Article 21, provided that they apply for authorization before 30 July 2024."

Ethena's terms of service, last revised on January 2025, said that Ethena GmbH submitted an application to create a public USDe offering with BaFin as of Jul. 29, 2024. Since this was before MiCA's July 30, 2024 deadline, MiCA's grandfathering provision let Ethena GmbH issue USDe "during the authorization process."

However, BaFin claims that Ethena GmbH has been offering USDe in Germany since June 28, 2024, and has been offering a "large portion" of its 5.4 billion USDe token supply outside of Germany before that same date.

"Ethena GmbH took advantage of a transitional arrangement under the European MiCAR regulation to enter the German market," BaFin said in its statement.

BaFin also said it had "well-founded suspicion" that the Ethena Labs subsidiary publicly offered the Ethena Staked sUSDe token as a security "without the required securities prospectus" in Germany, the agency's release continues.

Ethena Labs responds

"Since its inception, Ethena has been exploring various options and jurisdictions when it comes to regulatory frameworks globally that would be conducive to our business, and as a result we have multiple entities within our structure facilitating minting and redemption. A MiCAR authorization via Ethena GmbH was one of various options we have been pursuing," Ethena Labs wrote on the social media platform X Friday. 

"We were informed today that Ethena GmbH’s application under the MiCAR regulatory framework will not be approved," the firm continued. "While we are disappointed by this decision, we will continue to evaluate alternative frameworks."

Ethena Labs stated that no assets have been frozen, and BaFin's move will not impact USDe listings, token minting, or redemptions facilitated by Ethena BVI Limited, the firm's subsidiary that also issues USDe.

The Block's Data Dashboard shows that USDe is the third largest USD-pegged stablecoin by market supply, trailing Circle's USDC and Tether's USDT.