Ethena Labs, a prominent player in the cryptocurrency industry known for its synthetic stablecoin USDe, recently made headlines with its decision to close down its operations in Germany and withdraw its application for regulatory approval under the Markets in Crypto-Assets Regulation (MiCAR) in the European Union. This move comes in response to enforcement action taken by BaFin, Germany’s financial regulatory authority, which required the firm to cease public sales of USDe due to noncompliance with MiCAR regulations.
In a statement released on social media platform X, Ethena Labs confirmed the closure of its German entity, Ethena GmbH, stating, “We have agreed with BaFin to wind down all activities of Ethena GmbH and will no longer be pursuing the MiCAR authorization in Germany.” The company also announced that all whitelisted users previously onboarded through its German entity had been successfully migrated to its affiliated entity based in the British Virgin Islands, Ethena (BVI) Limited.
Despite the closure of Ethena GmbH, operations have continued seamlessly under the BVI entity, with the issuance of USDe tokens totaling around 5.4 billion. The majority of USDe in circulation was issued outside of Germany and prior to the enforcement of MiCAR regulations. BaFin’s rejection of Ethena GmbH’s MiCAR application highlighted significant deficiencies in the firm’s organizational structure and raised concerns about the legality of its yield-bearing sUSDe token under German securities laws.
The regulatory challenges faced by Ethena Labs in Germany reflect a broader trend of increased oversight and scrutiny of stablecoin issuers in the EU. MiCAR, which came into full effect in late 2024, imposes stringent requirements on stablecoin issuers, including full reserve banking, transparency, and regulatory approval. The classification of stablecoins into asset-referenced tokens and e-money tokens subjects them to different regulatory frameworks, leading to delistings of non-compliant stablecoins by major exchanges such as Kraken, Crypto.com, and Binance.
The closure of Ethena GmbH and the withdrawal from MiCAR approval highlight the complex regulatory landscape facing crypto firms in Europe and the need for flexible, multi-jurisdictional strategies to navigate these challenges. As regulatory barriers continue to rise, innovators in the stablecoin space may shift their focus to offshore or less restrictive markets. Maintaining user trust and credibility through transparency and proactive compliance will be crucial for stablecoin issuers seeking long-term success in regulated markets.