Germany’s Federal Financial Supervisory Authority has turned down Ethena Labs’ request to issue asset-referenced tokens under the European Union’s Markets in Crypto-Assets Regulation (MiCAR). The agency has also expressed worries that the sUSDe token might represent an unauthorized security offering.
According to the regulatory body’s announcement, the application from Ethena GmbH, a Frankfurt-based subsidiary of Ethena Labs, displayed “significant deficiencies” in its organizational procedures, failing to align with MiCAR standards regarding asset reserves and capital adequacy.
As a result, immediate supervisory actions were taken, including a ban on additional public offerings of the USDe token in Germany, and custodians were ordered to freeze the token’s reserve assets.
Interestingly, issuers of stablecoins have been encountering challenges under the MiCA regulation. Major European exchanges recently delisted Tether USD (USDT) due to concerns over potential non-compliance, though authorities have yet to formally classify it as such.
### Halted USDe Issuance
Additionally, despite a transitional provision under MiCAR, Ethena GmbH continued to issue the token in Germany after applying for authorization on July 29, 2024. Currently, there are around 5.4 billion USDe tokens in circulation, most of which were issued before MiCAR was enforced and outside of Germany.
The regulatory body clarified that its actions do not impact the secondary market trading of USDe, but they do temporarily restrict direct redemptions through Ethena GmbH. Since January 2025, an affiliated company located in the British Virgin Islands has also been involved in the token’s issuance.
To ensure compliance, the regulator has appointed a special representative to monitor the situation and highlighted the possibility of further actions, including a prohibition on public offerings related to securities.
### Securities Offering Concerns
In addition to operational concerns, the regulatory authority indicated a “sufficiently substantiated suspicion” that the sUSDe token may qualify as a security under German law, which has been offered publicly without an approved prospectus. The sUSDe token, which generates yield through staking USDe, has raised regulatory eyebrows due to its financial structure and implied profit promise that could lead to it being classified as a security.
This stance presents a regulatory challenge for hybrid instruments like sUSDe, combining stablecoin attributes with yield-generating capabilities. The authority is actively assessing whether such public distributions necessitate adherence to securities regulations, including disclosure requirements. The outcome of this determination could set a significant precedent for similar crypto assets across the European Union.
### Response from Ethena Labs
In reaction to these developments, Ethena Labs released a statement acknowledging that it had received notification of the regulator’s decision to deny the MiCAR application for Ethena GmbH. The company confirmed it is “evaluating alternative frameworks” for regulatory compliance.
Ethena emphasized the exploratory nature of its approach, stating, “Since its founding, Ethena has assessed various options and jurisdictions concerning global regulatory frameworks. A MiCAR authorization via Ethena GmbH was one of multiple paths we were pursuing.”
The firm reassured stakeholders that the decision does not affect USDe minting and redemption activities led by Ethena BVI Limited, which services the “vast majority” of users. Ethena also dismissed rumors regarding an asset freeze, asserting that all reserves are accounted for, and indicated plans to update its terms of service in the upcoming week.
The regulatory body’s rejection exemplifies the intensified scrutiny faced by stablecoins and synthetic yield instruments within European markets following the implementation of MiCA.