- Ethena Labs shut down its German unit and withdrew from MiCA licensing efforts.
- BaFin cited licensing flaws, banned USDe sales, and froze reserves.
- Operations moved to the British Virgin Islands, with USDe still active on secondary markets.
Ethena Labs, the creator of the synthetic stablecoin USDe, has closed down its German subsidiary, Ethena GmbH, and decided to withdraw from efforts to be approved as a regulated entity under the European Union’s Markets in Crypto Assets Regulation (MiCA).
Ethena Confirms Exit from German Market
This follows a March BaFin enforcement action against the firm to cease all public sales of USDe because it did not comply with MiCA requirements. Ethena Labs responded by sending a public statement on X confirming it had agreed with BaFin to officially wind down all activities related to its German entity.
Per the company, Ethena Limited, the company’s entity based in the British Virgin Islands, has been minting and redeeming USDe since March 21. After fully migrating the originally onboarded users via Ethena GmbH, we identified the BVI as the home of the EthSwap subreddit. Accordingly, the German subsidiary has no active operations or clients.
Ethena Labs Faces MiCA Setback, Explores New Regulatory Paths
In their March directive, BaFin cited ‘serious flaws’ in the licensing process for Ethena GmbH’s token sale and specifically cautioned against the sale of unregistered securities, in this case, sUSDe tokens. The regulator froze USDe reserves held by Ethena’s custodian, ordered its German website to be closed, and banned future takeovers of local customers.
The order only applies to the primary marketing aspect; however, Ethena Labs pointed out that USDe is still listed in secondary markets and is not influenced by regulatory action. The firm was disappointed when MiCa compliance was denied, but it is in the process of exploring other regulatory avenues for future operations.
As the full European implementation of MiCA nears, regulatory compliance with stablecoins is becoming a key priority for EU regulators. Ethena withdraws from the German market due to the rising difficulty of surviving in the crypto project as they shoulder through the convoluted and getting more stringent for Europe regulatory environment.
