The German Federal Financial Supervisory Authority, known as BaFin, has issued a directive to Ethena GmbH to halt all public sales of its stablecoin, USDe. This decision follows a detailed review by the regulator, which uncovered significant issues in the approval process for the stablecoin.

Regulatory Violations and MiCAR Compliance

On March 21, 2025, BaFin announced that Ethena GmbH’s synthetic dollar, USDe, is in violation of the European Union’s Markets in Crypto-Assets Regulation (MiCAR) requirements. The EU has made stablecoin regulation a top priority, and failure to meet MiCAR compliance standards has become a critical barrier for many stablecoin issuers.

“The BaFin also has reasonable grounds to suspect that Ethena GmbH in Germany sells securities in the form of sUSDe tokens from Ethena OpCo. Ltd. without the required prospectus,” the regulator stated.

As a result, BaFin has mandated that Ethena GmbH immediately cease all public sales of USDe. This enforcement move highlights the increasing scrutiny on cryptocurrency projects operating within the EU.

Enforcement Actions Taken by BaFin

As part of the enforcement measures, BaFin has implemented the following actions:

  • Freeze on USDe Reserves: Ethena’s custodial reserves for USDe have been frozen.
  • Website Shutdown: Ethena GmbH is required to take down its web portal and suspend the registration of new users.

It is important to note that BaFin’s order applies only to primary sales of the stablecoin. Secondary sales remain unaffected by this directive, allowing existing token holders to trade USDe on secondary markets.

Response from Ethena Labs

In response to the regulatory action, Ethena Labs released a public statement via social media, acknowledging the decision and outlining their future plans. The statement confirmed that Ethena GmbH’s MiCAR application would not be approved, but the company is actively exploring alternative regulatory frameworks.

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

Ethena Labs clarified that the BaFin order does not impact the stablecoin’s listing or its core functionality. Minting and redemption services for USDe will continue to be managed by Ethena Limited, a separate entity registered in the British Virgin Islands. This entity is responsible for the majority of USDe’s minting operations.

Ethena’s Reassurance on Asset Backing

Ethena Labs has assured users that the stablecoin remains fully backed and that no assets have been frozen as part of BaFin’s enforcement measures. The company emphasized its commitment to maintaining financial stability for its users despite the regulatory setback.

“USDe remains fully backed [and] no assets have been ‘frozen,'” Ethena Labs noted in its statement.

What This Means for Stablecoin Issuers

This development underscores the growing importance of regulatory compliance for stablecoin issuers operating within the European Union. The introduction of MiCAR has set a high bar for transparency, security, and legal adherence, making it critical for crypto businesses to align with these standards to avoid enforcement actions like those faced by Ethena GmbH.

For investors and users, this serves as a reminder to stay informed about the regulatory status of cryptocurrencies and stablecoins they engage with. Understanding the legal framework surrounding digital assets can help mitigate risks associated with non-compliant issuers.

Stay updated on the latest cryptocurrency and financial news to make informed decisions in an evolving regulatory landscape.

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