- German regulators BaFin blocked Ethena Labs subsidiary Ethena GmbH from selling USDe.
- This ban is due to violations of the EU’s MiCA regulations and unregistered securities.
- The secondary market trading through other entities like Ethena (BVI) remains unaffected.
In an unexpected move, German regulators blocked the sale of Ethena Labs USDe, citing regulatory violations and concerns over unregistered securities. USDe, the fourth-largest stablecoin by market cap, was offered in Germany on June 2024 by Ethena GmbH, the German subsidiary of Ethena Labs. The country’s financial supervisory authority, BaFin, prohibited Ethena GmbH from selling its USDe stablecoin, highlighting violations of the EU’s Markets in Crypto Assets (MiCA) regulations and concerns over unregistered securities.
In an official announcement, BaFin stated that the firm entered the German markets by taking advantage of a transitional arrangement under the MiCA regulations. The regulatory agency pointed out that the firm had applied for authorization just a day before the deadline, allowing it to issue its tokens till it either gets authorized or removed. Ethena GmbH has been issuing tokens since June 28, 2024, and currently, there are about 5.4 billion tokens in circulation. Also after Ethena GmbH issued tokens temporarily on its own, another set of tokens was issued by Ethena BVI Limited, a separate entity based in the British Virgin Islands since January 2025.
Following regulatory scrutiny, BaFin placed multiple supervisory measures on Ethena GmbH to protect customers, wherein it blocked the asset reserves and website and also appointed a special representative to monitor the measures. BaFin’s investigation found that Ethena GmbH had not met MiCA compliance standards, especially regarding capital reserves. Further, regulators suspected that the company was issuing unregistered securities in the form of ‘sUSDe’ tokens.
In response, Ethena Lands expressed disappointment but reassured users that USDe remains fully backed and operational outside Germany. “We are actively exploring MiCA certification and considering alternative jurisdictions,” the company stated in an X post. Further, it assured users that the ban will not disrupt any current listings of USDe on secondary markets or minting and redemption via Ethena BVI Limited.
Although users can no longer redeem their USDe on Ethena GmbH, BaFin’s ruling sets a precedent for tighter enforcement across the industry, potentially impacting other crypto firms navigating MiCA’s regulatory landscape. Their decision reflects the regulator’s cautious approach towards crypto assets operating within Germany’s jurisdiction.
Related: Crypto.com Expands in EEA with MiCA License for Crypto Services
Key Developments by Ethena Labs
Earlier this week, Ethena Labs and Securitize announced Converge, a new Ethereum Virtual Machine-compatible blockchain that will use stablecoins instead of native crypto assets for transaction fees. These contrasting developments highlight increasing regulatory scrutiny alongside institutional adoption.
Despite the setback, Ethena Labs remains a key player in the crypto space. The company continues to attract institutional investment for its products, and it raised over $100 million in funding from investors to launch a new token called iUSDe. Other investments include a $20 million backing from MEXC and a 500,000 ENA token purchase by World Liberty Financial.
