Key Takeaways:
- Ethena Labs’ exit from Germany and withdrawal from MiCAR approval is part of the mounting regulatory hurdles facing stablecoin issuers in the EU.
- The company’s swift migration of users and operations to its British Virgin Islands entity shows how crypto firms adapt by shifting jurisdictions to maintain business continuity amid local crackdowns.
- BaFin’s enforcement action and concerns over unregistered securities are part of a new era of strict oversight, pushing crypto innovators to rethink their European strategies and compliance models.
Ethena Labs, the crypto firm behind the synthetic stablecoin USDe, announced on April 15 that it will shut down its German entity, Ethena GmbH, and withdraw its application for regulatory approval under the European Union’s Markets in Crypto-Assets Regulation (MiCAR).
The move follows enforcement action by Germany’s financial regulator, BaFin, which ordered the firm to halt public sales of USDe due to noncompliance with MiCAR.
Ethena Labs Shuts Down German Entity After BaFin Crackdown
In a statement posted on X, Ethena Labs confirmed, “We have agreed with BaFin to wind down all activities of Ethena GMBH and will no longer be pursuing the MiCAR authorization in Germany.”
The company added that all whitelisted users previously onboarded through its German entity had already transitioned to its affiliated British Virgin Islands-based company, Ethena (BVI) Limited.
Ethena GmbH has not conducted any minting or redemption of USDe since March 21, 2025, and the firm’s operations have continued without disruption under its BVI entity.
The BVI entity has been issuing its USDe token, currently totaling around 5.4 billion tokens.
According to the company, Ethena GmbH no longer has any whitelisted users or direct customers. The company clarified that most USDe in circulation was issued outside of Germany and prior to MiCAR enforcement.
BaFin’s rejection of Ethena GmbH’s MiCAR application made public on March 25, cited “significant deficiencies” in the firm’s organizational structure and failure to meet regulatory standards on asset reserves and capital adequacy.
BaFin also raised concerns that the sUSDe token, Ethena’s yield-bearing variant of USDe, could qualify as a security under German law, which would require a registered prospectus for public offerings.
BaFin’s notice prompted a series of supervisory actions, including a halt to USDe public offerings within Germany and an order for custodians to freeze reserve assets.
While BaFin clarified that secondary market trading of USDe is unaffected, redemptions through the German subsidiary are restricted.
Ethena had originally applied for authorization on July 29, 2024, which allowed it to continue issuing USDe under MiCAR’s transitional rules until a final decision was reached.
Most of the 5.4 billion USDe in circulation had already been issued before MiCAR’s enforcement or outside Germany.
MiCAR Reshapes EU Crypto Stablecoin Landscape
In addition to operational concerns, BaFin stated it held a “sufficiently substantiated suspicion” that sUSDe qualifies as a security under German law, due to its yield-bearing structure and the potential for investor profit.
BaFin is now assessing whether public offerings of such hybrid tokens require full compliance with securities law, including approved prospectuses and disclosures.
This shows the broader regulatory shift in Europe, where MiCAR is reshaping crypto firms’ operations.
MiCAR, fully in effect as of late 2024, mandates strict requirements for stablecoin issuers, including full reserve banking, transparency, and regulatory approval.
Stablecoins are classified into asset-referenced tokens and e-money tokens, each subject to different rules.
Some exchanges, like Kraken and Crypto.com, have already delisted Tether’s USDT in response. Binance followed suit on March 3, removing several non-compliant stablecoins across the European Economic Area, including DAI, FDUSD, and PAXG.
Meanwhile, licensed exchanges are using MiCAR’s “passporting” system, which allows them to operate across all 30 EEA countries under a single regulatory umbrella.
Frequently Asked Questions (FAQs)
It shows how difficult it is to handle different regulations, pushing crypto firms to use flexible, multi-jurisdictional strategies for survival and growth.
Yes, as regulatory barriers rise, innovators may increasingly favor offshore or less restrictive markets.
The crackdown on USDe suggests that synthetic stablecoins lacking traditional asset backing may face more scrutiny and less adoption in tightly regulated regions.
Regulatory exits can lower user confidence, making transparency and proactive compliance important for stablecoin issuers seeking long-term credibility.
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