Overview
Germany’s financial regulator, BaFin, has identified “serious deficiencies” in Ethena’s USDe token, which the company markets as a synthetic dollar. With immediate effect, BaFin has prohibited the issuer from making this token available to the public.
Key Points:
- BaFin cited issues related to the bank’s business organization and breaches of MiCA regulations.
- Ethena is seeking to explore alternative regulatory avenues.
- Following BaFin’s announcement, ENA, the governance token associated with the protocol, dropped by 6.5% in the past day.
The European Union imposed the Market in Crypto Assets (MiCA) regulations for stablecoin issuers last year. Ethena GmbH has been issuing USDe since late June 2025, allowing companies to continue token issuance during the licensing application process unless mandated to cease.
During the ongoing licensing process, BaFin identified significant issues in the bank’s organizational operations, including demands related to asset reserves and capital requirements compliance.
USDe is categorized as an asset-referenced token due to its value being reinforced by other assets, rights, or currencies. Ethena markets the protocol’s 5.4 billion token as a synthetic dollar pegged at $1, employing various cryptocurrencies, including Bitcoin and Ethereum, as backing assets.
Moreover, BaFin suspects that Ethena GmbH may be improperly offering securities in the form of ‘sUSDe’ tokens without the necessary securities prospectus.
Ethena has stated on the platform X that it will continue to seek out alternative frameworks now that their application under the MiCAR regulations has been rejected.
Observations
Ethena’s governance token, ENA, has experienced a 6.5% decline recently due to the updates received and additional losses post the announcement, as reflected in data from CoinMarketCap.
