The German financial regulatory authority has banned all public sales of Ethena GmbH’s USDe, a synthetic dollar, asserting that the token breaches the European Union’s MiCAR regulations and accusing the company of offering unregistered securities in the area.
The regulator instructed Ethena to halt the reserve assets backing the token, shut down the website portal, and stop onboarding new clients. This was outlined in an official announcement.
Additionally, a representative has been appointed to oversee the situation with Ethena. In a translated statement, the regulator indicated:
“There are reasonable grounds to suspect that Ethena GmbH is selling securities in the form of sUSDe tokens from Ethena OpCo. Ltd. in Germany without the necessary prospectus.”
The statement further noted, “The USDe and sUSDe tokens are interlinked, allowing investors to exchange a USDe token for a sUSDe token.”
Even with the restrictions on primary sales and issuance of the token, the regulator specified that secondary sales of the token will remain unaffected.
In a message on social media, Ethena Labs reassured that the backing of USDe is still intact and that the token can be redeemed through Ethena BVI Limited.
Ethena GmbH seeks MiCA approval
Ethena applied for regulatory approval under MiCA on July 29, 2024, anticipating to be “grandfathered” into the established regulatory framework.
However, on March 21, the regulatory authority rejected the application, citing “serious deficiencies in the business organization” and failures to meet MiCA compliance standards.
The authority acknowledged the existence of approximately 5.4 billion Ethena tokens in circulation, pointing out that many were minted outside German jurisdiction and prior to the implementation of MiCA.
Ethena garners investment for its offerings
Despite the risks associated with synthetic dollars, Ethena continues to draw institutional investment for its products.
This year, the company raised over $100 million from investors to launch a new token, iUSDe, aimed at institutional clients.
Furthermore, a partnership with a decentralized finance protocol established by former US President Donald Trump in December 2024 has been formed, with World Liberty Financial purchasing 500,000 ENA tokens, which are the governance tokens associated with Ethena.
Additionally, on February 26, the MEXC crypto exchange announced a $20 million investment in Ethena’s USDe to enhance the adoption of stablecoins.
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