- Ethena Labs is closing its German operations after BaFin identified compliance issues with its USDe stablecoin.
- The company will no longer pursue MiCAR authorization in Germany, with affected users being onboarded to Ethena’s BVI entity instead.
- USDe remains the fourth-largest stablecoin with $4.9 billion in circulation, using a unique delta-hedging strategy to maintain its dollar peg.
Ethena Labs has agreed to shut down its German subsidiary following regulatory intervention by Germany’s Federal Financial Supervisory Authority (BaFin). The synthetic stablecoin developer announced on April 15 that it would cease all operations of Ethena GmbH less than a month after German regulators identified "deficiencies" in its dollar-pegged USDe stablecoin.
As part of this agreement, Ethena Labs confirmed it "will no longer be pursuing MiCAR authorization in Germany," referring to the European Union’s Markets in Crypto-Assets Regulation framework. The company emphasized that no mint or redeem activity for USDe has occurred through the German subsidiary since March 21, when BaFin first halted the stablecoin’s activities.
"All whitelisted mint and redeem users previously interacting with Ethena GmbH have at their request been onboarded with Ethena (BVI) Limited instead and have no ongoing relationship with Ethena GmbH whatsoever," the company stated in its announcement. BaFin’s original intervention came after identifying compliance failures and potential securities law violations connected to USDe.
USDe distinguishes itself from traditional stablecoins like USDt and USDC by employing an automated delta-hedging strategy to maintain its dollar peg. This approach combines spot holdings, onchain custody, and liquidity buffers. Despite the regulatory challenges, USDe remains the fourth-largest stablecoin globally with a circulation value of $4.9 billion, according to CoinMarketCap data.
MiCA Regulations Transform European Stablecoin Landscape
The European Union’s MiCA framework has established comprehensive requirements for cryptocurrency usage, imposing strict compliance standards and consumer protections across member states. For stablecoin issuers, these regulations mandate adequate reserves backing tokens, segregation of reserve assets from users’ funds, and regular reporting obligations.
As of February, ten stablecoin issuers have received approval under MiCA regulations. Patrick Hansen, Circle’s senior director of EU strategy and policy, indicated that regulators have approved ten euro-pegged stablecoins and five US dollar-pegged stablecoins to date. Approved issuers include Circle, crypto.com, Societe Generale, and Membrane Finance.
Notably absent from the approved list is Tether, the issuer of market-leading USDt stablecoin, which has opted not to pursue MiCA registration at this time. This decision places Tether in contrast to competitors who have chosen to align with the European regulatory framework.
The regulatory developments in Germany reflect the increasing scrutiny facing crypto assets in Europe‘s largest economy as authorities work to implement unified standards under the MiCA framework.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Bank of England Tests Offline CBDC, Finds Technical and Security Challenges
- HashFlare Co-Founders Ordered to Leave U.S. Despite Court Order
- Bitcoin Prices Surge Amid Dollar Crisis Fears as Trump Escalates Tariffs
- CoinDesk 20 Index Edges Up 0.1% as Bitcoin, BCH Lead Modest Gains
- Crypto Exec Calls Out Market Manipulation as Industry’s Biggest Woe
