German Regulator Blocks USDe Token Sales by Ethena Over Violations

Germany’s top financial regulator, BaFin, has officially halted all public sales of Ethena’s USDe token. The reason? Violations of the European Union’s new MiCA regulation. Ethena GmbH, the German arm of the stablecoin project, is accused of ignoring key rules. BaFin says the company sold tokens without a proper prospectus and didn’t hold enough reserves. These actions violate both German securities law and the broader EU framework.

BaFin didn’t just stop the token sales—it froze Ethena’s reserve assets and shut down its online portal. The firm is also banned from taking in new customers. For now, the token can still be traded on secondary markets, but the primary issuance is dead in the water.

Ethena’s EU Troubles Don’t End With Germany

While BaFin’s move is a German enforcement action, it sends a strong message across the EU. Ethena has been trying to navigate the MiCA regulatory environment but hasn’t met the standards. On July 29, 2024, the company filed for MiCA approval, hoping to get grandfathered into compliance. That plan failed. BaFin rejected the request in March 2025, citing major flaws in Ethena’s business structure and token management.

Ethena started issuing USDe just days before MiCA went into effect. That timing now looks risky. With over $5.4 billion USDe tokens circulating—many minted outside Germany—the company’s strategy to skirt full compliance has backfired. BaFin is working with other EU regulators, including the ECB and ESMA, to coordinate further actions.

Ethena Still Active Outside Germany

Despite the ban, Ethena isn’t shutting down. It continues operations through other entities, like Ethena BVI Limited in the British Virgin Islands. The company says USDe remains backed and can be redeemed outside the EU. Ethena Labs also stated it’s exploring alternative legal routes to reintroduce USDe into regulated EU markets.

Meanwhile, investors holding USDe in self-custodied wallets or on decentralized exchanges are unaffected for now. BaFin’s freeze only hits the German branch. That gives Ethena some breathing room, but not much. The German ban is a warning shot. Other EU countries may follow if they find similar legal gaps.

Ethena’s Synthetic Model Raises Eyebrows

One of the key concerns BaFin raised involves Ethena’s synthetic stablecoin model. USDe is linked to another token, sUSDe, which pays yield. BaFin believes this setup may count as offering unregistered securities. Since there was no prospectus outlining the terms of these returns, the regulator sees this as a red flag.

Synthetic stablecoins like USDe don’t hold traditional fiat reserves. Instead, they rely on derivatives and market mechanisms to hold their peg. This model can work under the right conditions, but it adds complexity—and risk. BaFin’s move suggests regulators are less tolerant of such models under MiCA.

The Future of Ethena in the EU

Ethena says it’s not giving up on the EU market. The company will likely try to restructure operations and reapply for regulatory approval. But the setback is significant. Being blocked in Germany—one of Europe’s biggest crypto hubs—undermines the firm’s EU ambitions. It also casts doubt on whether synthetic stablecoins can meet MiCA standards without major adjustments.

Still, Ethena has deep-pocketed backers. In early 2024, it raised over $100 million and secured a partnership with World Liberty Financial. Even after the BaFin ban, the USDe token held its peg, dipping slightly to $0.99. But trust, not price, is the real challenge now.