The German financial authority BaFin has intervened to stop Ethena GmbH from making a public offering of its US dollar-pegged stablecoin, USDe. The regulator’s decision came after significant concerns were raised during the review of Ethena’s authorization process, leading to instructions for freezing the asset reserves supporting the coin.
Regulatory Framework and Emerging Issues
Under the European Union’s Markets in Crypto-Assets (MiCA) framework, issuers of asset-linked tokens—unless they are classified as credit institutions—must secure proper authorization before launching their tokens. Ethena had submitted the requisite application before the deadline of July 30, 2024, intending to operate under a transitional regime while awaiting a final decision regarding its permit.
However, BaFin expressed strong reservations after discovering that Ethena initiated the offering of USDe on June 28, 2024, well ahead of the permissible timetable. The authority also raised suspicions that the company might have presented its token, Ethena Staked sUSDe, as a security without providing the mandated financial prospectus, a move that could breach applicable German regulations.
Response and Future Strategy
In response to these developments, Ethena Labs admitted that it is grappling with a complex regulatory landscape. The firm emphasized that it is currently investigating various international jurisdictions to ensure full compliance with the differing requirements. Ethena Labs reassured stakeholders that no additional asset reserves have been frozen and that the operational activities of its stablecoin through its subsidiary, Ethena BVI Limited, remain unaffected.
Looking ahead, Ethena is committed to exploring alternative regulatory paths as it navigates this evolving global framework. The situation underscores the ongoing challenges at the interface of innovative digital finance and established regulatory regimes.
Key Dates
| Date | Event |
| June 28, 2024 | USDe offering commenced |
| July 30, 2024 | Authorization application deadline |
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