BaFin Bars Ethena GmbH from Issuing USDe Tokens in Germany

Highlights:

• BaFin has stopped Ethena GmbH from offering USDe in Germany due to issues in its application.
• BaFin suspects that sUSDe may be a security and that Ethena GmbH offered it without the required approval in Germany.
• Ethena Labs will focus on global operations while Ethena BVI continues with minting and redeeming USDe.

Germany’s Federal Financial Supervisory Authority BaFin has rejected Ethena’s application to issue USD-pegged stablecoin USDe under the European Union’s Markets in Crypto-Assets Regulation (MiCAR). The regulator pointed to serious deficiencies in Ethena GmbH’s organization, reserves, and capital. BaFin also ordered Ethena GmbH to stop the public offering of USDe in Germany and instructed custodians to freeze the token’s reserve assets. In addition, BaFin appointed a special representative to oversee Ethena GmbH’s actions inside Germany.

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🚨 German regulator rejects Ethena Labs’ license application in the EU, suspects sUSDe is a security.

Looks like Ethena Labs is taking a major L in Germany’s crypto arena! 🎭 The Federal Financial Supervisory Authority, aka BaFin, has slammed the door on their application for… pic.twitter.com/FKFtut2ena

— Blockman (@blockmandev) March 21, 2025

Ethena GmbH applied for authorization on July 29, 2024, one day before MiCAR’s deadline, which meant the company could continue to issue USDe under a transitional arrangement. Although BaFin allowed the company to operate under this provision, it found that the application did not meet MiCAR requirements.

Prior to the deadline, Ethena GmbH had already been issuing USDe in Germany and abroad with about 5.4 billion USDe tokens in circulation. BaFin outlined that its measures do not hinder USDe trading on secondary markets but will prevent its crypto issuer, Ethena GmbH, from fulfilling redemption requests for the time being.

sUSDe Token Faces Suspicion of Being an Unlicensed Security

Along with the rejection, BaFin raised concerns regarding sUSDe, a yield-bearing token that users acquire by staking USDe. The authority believes that sUSDe may meet the conditions of a security under German law because it involves profit promises linked to its financial structure. BaFin suspects that Ethena GmbH offered sUSDe publicly in Germany without submitting a securities prospectus, which is required under German law.

Moreover, BaFin is evaluating to determine if additional rules should apply for hybrid instruments such as sUSDe. The evaluation could affect other projects that also offer similar products in Europe.

Some other stablecoin issuers have faced challenges following the introduction of MiCAR. For instance, some European exchanges plan to delist Tether USDT due to concerns about compliance.

Ethena Labs Shifts Focus to Global Operations

Ethena Labs has confirmed it was informed of BaFin’s decision to reject the MiCAR application and stated it is looking into alternative compliance options. According to the company, it had always been looking at different jurisdictions for its operations and highlighted that the German subsidiary was one of multiple entities that were part of the company.

An affiliated company, Ethena BVI Limited, based in the British Virgin Islands, will proceed in minting and redeeming USDe for the majority of its user base.

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…

— Ethena Labs (@ethena_labs) March 21, 2025

Furthermore, Ethena Labs highlighted that none of its assets have been frozen and all of its reserve assets are still available. Also, soon the company said it would update its terms of service. Earlier, Ethena Labs and Securitize launched a partnership on a blockchain that is Ethereum Virtual Machine compatible. Converge users will be able to pay gas fees with stablecoins USDe or USDtb rather than a native cryptocurrency.

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