The news blew up on March 21st, 2025, through “blocknewsx.com” as Lucas James requested to deliver the story straight to you. BaFin ordered Ethena GmbH, which operates as Ethena Labs’ Frankfurt-based division, to stop offering the public their USDe stablecoin because of serious regulatory violations. Ethena GmbH faces harsh measures from BaFin through their directive to stop holding USDe asset reserves due to serious flaws in the token authorization protocol. The regulatory development constitutes an unexpected move that requires analysis from my perspective.
All attention is currently focused on the EU’s Markets in Crypto-Assets framework known as MiCA. The authorization exemptions of MiCA allow Ethena GmbH to continue its token operations since they initiated before June 30, 2024 and filed their application on or before July 30, 2024. Ethena GmbH satisfied the requirement by submitting their application to BaFin on July 29th of the following year according to their terms of service scheduled for January 2025. The catch? Ethena GmbH initiated German USDe distribution on June 28, 2024 and distributed a considerable amount of their total 5.4 billion USDe stock worldwide before that date according to BaFin. Ethena GmbH exploited the MiCAR transitional period to access the German marketplace, according to BaFin officials. Ethena GmbH raised doubts regarding their Staked sUSDe token which they provided to users while lacking a valid prospectus. Ouch.
Ethena Labs Fights Back—Sort Of
Ethena Labs refused to take any delays in their response. Ethena GmbH pursued multiple market entry possibilities, with the MiCAR authorization process at Ethena GmbH being one of them, they stated in their recent X post. BaFin delivered their rejection during the morning hours that day. Ethena Labs remains committed to exploring different regulatory frameworks despite expressing disappointment. The company asserts that its subsidiary, Ethena BVI Limited, will preserve USDe minting operations and redemptions while the assets remain uninfluenced by the suspension. The German market turned out to be a failure for Lucas James yet the company exhibits no significant anxiety about this setback. The Block’s Data Dashboard shows that USDe holds the third position among USD-pegged stablecoins after USDC and USDT.
The German regulatory issues show that MiCA is struggling through its development stage. The transitional loophole that Ethena relied on to avoid BaFin’s scrutiny turned out to be insufficient in BaFin’s eyes. The regulatory platform in the EU shows no restraint when it comes to its oversight duties.
Stablecoins vs. the Swiss Stance
The Swiss National Bank’s (SNB) rejection of Bitcoin for reserves directly connects to this article. In this location, I observed how Martin Schlegel, the governor, reflected dissatisfaction toward Bitcoin’s preliminary price volatility, which stood at a -1.09% level today, as shown here, while Ethereum experienced a -2.78% decline, (check out Tweet). BaFin’s position on stablecoins is similar to that of the Swiss regulatory stance because USDe prevents price swings, yet BaFin remains vigilant against insecure regulatory frameworks. Switzerland leads blockchain development while maintaining no formal relationship with Bitcoin and Germany accepts cryptocurrencies through its regulatory structures. Different flavors, same caution.
What’s next? Following BaFin’s MiCA enforcement, Ethena Labs will most probably pursue business opportunities in non-EU territories. Follow “blocknewsx.com” to track the regulatory developments of this regulatory rollercoaster. My readers want to know about USDe’s difficulties entering the German market. Hit me up—I’m all ears.
