The Federal Financial Supervisory Authority of Germany (BaFin) announced on March 21 that it is suspending the issuance of the US dollar stablecoin USDe by Ethena GmbH, a subsidiary of Ethena Labs in Frankfurt. The regulatory statement pointed out that there are 'serious deficiencies in the token authorization process' for USDe, and it has requested the freezing of Ethena GmbH's reserve assets. This is the first significant regulatory action following the implementation of MiCA (the regulatory framework for crypto asset markets).
According to data from CoinMarketCap, Ethena's governance token ENA has fallen by 4.66% in the past 24 hours.
ENA has dropped 4.66% in the last 24 hours.
Disputes over MiCA transitional provisions spark controversy.
According to MiCA regulations, operators who issue tokens before June 30, 2024, may continue to operate during the authorization application period. Ethena GmbH claims to have submitted its application on July 29, 2024, complying with transitional provisions. However, BaFin's investigation found that Ethena GmbH provided USDe in Germany starting from June 28, 2024, and 'most' of the 540 million in circulation had been issued abroad prior, indicating potential abuse of transitional provisions.
sUSDe token involved in allegations of illegal securities issuance.
Ethena Labs responded on platform X, emphasizing that the assets of its German subsidiary have not been frozen, and the issuance and redemption of USDe are still operating normally through the British Virgin Islands entity Ethena BVI Limited. They admitted that their application under German MiCA was rejected and are currently evaluating compliance solutions in other jurisdictions. According to data from The Block, USDe currently holds the position of the third largest US dollar stablecoin with a market value of $5.4 billion, second only to USDT and USDC.
BaFin further accused that the staking token sUSDe issued by Ethena GmbH may constitute 'illegal securities issuance without providing a securities prospectus'. The regulatory body has requested an immediate cessation of related business based on 'reasonable suspicion', but did not specify the details of the investigation.
