BaFin Blocks Ethena GmbH’s Sale of USDe Stablecoin

BaFin Blocks USDe Sales: Ethena Labs’ Next Move Explained

BaFin– Ethena Labs’ USDe, the fourth-largest stablecoin by market capitalization, has been halted from being offered for sale by the company’s German subsidiary, Ethena GmbH, after BaFin, Germany’s financial regulatory authority, flagged “serious deficiencies” in the licensing approval process.

In addition to preventing the sale of Ethereum-based USDe, BaFin imposed a series of measures on Ethena GmbH to safeguard customers. These measures include blocking asset reserves, restricting access to its website, and appointing a special representative to oversee the enforcement of these actions.

According to BaFin, Ethena GmbH launched the stablecoin just before the Markets in Crypto Assets (MiCA) regulation took effect across the European Union. BaFin revealed that Ethena took advantage of a transitional provision under the MiCA regulation, which allowed the subsidiary to issue USDe tokens before the deadline of July 30, 2024. “Ethena GmbH applied for authorization on July 29, essentially securing the right to issue tokens under a temporary arrangement,” the regulatory body stated.

Future Plans and Impact on USDe

While Ethena Labs is exploring other avenues for MiCA certification, the company clarified that USDe trading on secondary markets will not be affected by the current measures on Ethena GmbH. The stablecoin issuer reassured users by stating, “USDe remains fully backed,” and that redemption and minting via other entities, such as Ethena (BVI) Limited, will continue without interruption.

BaFin’s investigation is still ongoing, with the authority raising concerns about Ethena GmbH potentially offering securities in Germany without the required prospectus.

Despite the regulatory scrutiny, Ethena Labs aims to maintain USDe’s position in the market while navigating the evolving regulatory landscape. The firm continues to seek MiCA authorization as one of several options in its ongoing regulatory strategy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.