tl;dr
Germany's Federal Financial Supervisory Authority (BaFin) has rejected Ethena Labs' application to issue asset-referenced tokens under the European Union's Markets in Crypto-Assets Regulation (MiCAR). BaFin suspects that the sUSDe token may constitute an unlicensed security offering and has imposed ...
Germany's Federal Financial Supervisory Authority (BaFin) has rejected Ethena Labs' application to issue asset-referenced tokens under the European Union's Markets in Crypto-Assets Regulation (MiCAR), suspecting that the sUSDe token may constitute an unlicensed security offering. BaFin has imposed supervisory measures, including prohibiting further public offerings of the USDe token within Germany and ordering custodians to freeze the token's reserve assets.
BaFin expressed concerns that the sUSDe token qualifies as a security under German law and has been offered publicly without an approved securities prospectus. In response, Ethena Labs stated that it is evaluating alternative regulatory frameworks for compliance and denied speculation of an asset freeze, asserting that all reserves remain available.
BaFin's rejection reflects the increasing scrutiny of stablecoins and synthetic yield instruments in European markets following the implementation of MiCA.
The regulator also raised concerns that the sUSDe may constitute an unlicensed security offering, exhibiting "significant deficiencies" in organizational practices and failing to meet MiCAR requirements concerning asset reserves and capital adequacy.
Some stablecoin issuers have been facing difficulties under the MiCA regulation, with major European exchanges delisting Tether USD (USDT) due to concerns about compliance.
Under a MiCAR transitional provision, Ethena GmbH continued issuing the token in Germany after applying for authorization on July 29, 2024, with approximately 5.4 billion USDe tokens currently circulating. BaFin clarified that its actions do not affect USDe's secondary market trading but temporarily restrict redemptions directly through Ethena GmbH.
BaFin expressed a "sufficiently substantiated suspicion" that the sUSDe token qualifies as a security under German law and has been offered publicly without an approved securities prospectus, introducing a regulatory challenge to hybrid instruments like sUSDe, which combine stablecoin mechanics with yield-generation features.
In response, Ethena Labs published a statement confirming that it had been informed of BaFin's decision to reject Ethena GmbH's MiCAR application and acknowledged the decision in a public statement. The company emphasized that the decision does not impact USDe minting and redemption activities facilitated by Ethena BVI Limited, which services the "vast majority" of users. The company also denied speculation of an asset freeze, asserting that all reserves remain available.