Ethena Labs, the company behind the synthetic stablecoin USDe, announced on April 15 the closure of its German entity, Ethena GmbH, and the withdrawal of the application for authorization under the European regulation MiCAR (Markets in Crypto-Assets Regulation).
The decision comes following an enforcement action by the German financial supervisory authority, BaFin, which has ordered the company to cease the public sale of USDe in German territory.
In a statement released on X, Ethena Labs stated:
“We have agreed with BaFin to cease all activities of Ethena GmbH and we will no longer pursue the MiCAR authorization in Germany”.
The company also specified that all users previously registered through the German branch have been transferred to its affiliated entity based in the British Virgin Islands, Ethena (BVI) Limited.
The tightening by BaFin pushes Ethena Labs out of Germany towards the British Virgin Islands
The operational transition was rapid and seamless. Since March 21, 2025, Ethena GmbH has no longer conducted creation or redemption operations of USDe. All activities are now managed by Ethena (BVI) Limited, which continues to issue USDe, with a current circulation of approximately 5.4 billion tokens.
According to what was reported by the company, Ethena GmbH no longer has registered users nor direct clients. Furthermore, the majority of USDe tokens in circulation were issued outside of Germany and before the entry into force of the MiCAR.
The reasons behind BaFin’s refusal
The rejection of the MiCAR authorization application by BaFin, made public on March 25, was due to “serious deficiencies” in the company’s organizational structure and non-compliance with regulatory standards regarding capital reserves and capital adequacy.
Another critical point raised by BaFin concerns the token sUSDe, a variant of USDe that offers returns to investors. According to the German authority, sUSDe could be classified as a financial instrument under German regulations, which would entail the obligation of a registered prospectus for public offerings.
Following these evaluations, BaFin has undertaken a series of supervisory actions, including the blocking of public offers of USDe in Germany and the order to custodians to freeze reserve assets. However, it has been clarified that the secondary trading of USDe is not subject to restrictions, while redemption operations through the German branch remain limited.
MiCAR and the new European regulatory landscape
The exit of Ethena Labs from Germany represents an emblematic case of the difficulties that crypto companies are facing in the European context. The MiCAR regulation, which fully comes into effect at the end of 2024, imposes stringent requirements for stablecoin issuers, including:
- Total asset reserve covering the issued tokens
- Operational transparency
- Preventive regulatory authorization
Stablecoins are now classified into two main categories: asset-referenced tokens and e-money tokens, each subject to specific rules.
In response to these new regulations, several exchange platforms have already begun to adapt. Kraken and Crypto.com have removed USDT by Tether from their listings, while Binance eliminated, on March 3, several non-compliant stablecoins throughout the European Economic Area, including DAI, FDUSD, and PAXG.
Multi-jurisdictional strategy: a response to regulatory pressures
The Ethena case highlights a growing trend among crypto companies: the migration towards more flexible jurisdictions to ensure operational continuity. The choice of the British Virgin Islands by Ethena Labs reflects a pragmatic strategy to circumvent European regulatory barriers while keeping their business model active.
This jurisdictional flexibility becomes crucial in a context where authorities, like BaFin, are adopting an increasingly strict approach, especially towards synthetic stablecoin that are not backed by traditional assets.
Case Ethena Labs: implications for the future of stablecoins in Europe
The exit of Ethena Labs from the German market raises important questions about the future of stablecoins in Europe. On one hand, the MiCAR regulation aims to protect investors and ensure financial stability. On the other hand, the risk is that of stifling innovation, pushing companies towards less regulated offshore markets.
Furthermore, regulatory uncertainty can negatively impact user confidence, making it essential for stablecoin issuers to adopt transparent and compliant practices to maintain their long-term credibility.
A new balance between innovation and regulation
The Ethena case represents a turning point for the crypto industry in Europe. The authorities are clearly raising the bar, and companies will have to adapt to an environment where compliance and transparency are no longer optional, but fundamental requirements.
The challenge now will be to find a balance between the need to regulate a rapidly evolving sector and the desire not to hinder technological innovation. In this scenario, the ability of companies to operate in multiple jurisdictions and to adapt quickly to regulatory changes will be crucial for their success.
Ultimately, the story of Ethena Labs is not just an isolated case, but a clear signal: the era of crypto regulation in Europe has begun, and with it, a new phase of transformation for the entire stablecoin ecosystem.