Germany’s BaFin Rejects Ethena Labs’ Application for Asset-Referenced Tokens
Germany’s Federal Financial Supervisory Authority (BaFin) has denied Ethena Labs’ request to issue asset-referenced tokens under the European Union’s Markets in Crypto-Assets Regulation (MiCAR). The regulator also expressed concerns that the sUSDe token may be considered an unlicensed security offering.
BaFin’s Official Notice
According to BaFin’s official notice, the application submitted by Ethena GmbH, a Frankfurt-based entity under Ethena Labs’ corporate structure, showed “significant deficiencies” in organizational practices and failed to meet MiCAR requirements regarding asset reserves and capital adequacy.
- BaFin imposed enforceable supervisory measures
- Prohibited further public offerings of the USDe token in Germany
- Ordered custodians to freeze the token’s reserve assets
Ordered to Stop USDe Issuance
Despite BaFin’s rejection, Ethena GmbH continued issuing the USDe token in Germany under a MiCAR transitional provision. Approximately 5.4 billion USDe tokens are currently in circulation, with most issued before MiCAR enforcement and outside of Germany.
- BaFin’s actions do not affect USDe’s secondary market trading
- Redemptions directly through Ethena GmbH are temporarily restricted
- Ethena BVI Limited in the British Virgin Islands also facilitates the token’s issuance
Securities Offering Concerns
BaFin expressed suspicions that the sUSDe token could be classified as a security under German law due to its financial structure and profit promises. The regulator is evaluating whether instruments like sUSDe, combining stablecoin mechanics with yield-generation features, need to comply with securities law.
- BaFin’s position poses regulatory challenges to hybrid instruments
- The outcome could set a precedent for similar crypto assets in the EU
Ethena Labs’ Response
In response to BaFin’s decision, Ethena Labs published a statement confirming the rejection of Ethena GmbH’s MiCAR application. The company is exploring alternative frameworks for regulatory compliance and emphasized that the decision does not impact USDe minting and redemption activities.
Ethena stated, “Since its inception, Ethena has been exploring various options and jurisdictions when it comes to regulatory frameworks globally.”
The company also denied rumors of an asset freeze, ensuring that all reserves remain available and announcing plans to revise its terms of service.
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