- Ethena Labs shuts down the German unit and ends MiCA plans after BaFin halts USDe stablecoin activity.
- BaFin flagged USDe for compliance issues leading to Ethena Labs’ exit from Germany.
- Ethena redirected all German users to its BVI entity following BaFin’s regulatory action.
Ethena Labs left the German market after the Federal Financial Supervisory Authority (BaFin) signed an agreement. The regulator suspended USDe stablecoin activities in March 2025 after discovering compliance issues and violations of securities laws.
Ethena Labs’ official declaration on April 15 announced the termination of business operations at its German subsidiary, which operates under Ethena GmbH. Ethena Labs plans to end its pursuit of the European Markets in Crypto-Assets Regulation (MiCA) authorization for German operations.
The German entity of Ethena responded that since March 21, it stopped entirely from USDe token redemption and minting operations. The migration process resulted in all users who joined Ethena GmbH moving to its newly established entity, Ethena (BVI) Limited, based in the British Virgin Islands. The German arm has separated from delegating operational activities to these users.
Regulatory tightening under the MiCA framework
The regulatory oversight of the MiCA regulation in the European Union demonstrates BaFin’s action against Ethena Labs. To operate under the framework, stablecoin issuers must fulfil requirements, including full asset backing, maintaining separate user funds from company assets, and performing regular reporting obligations.
Fifty stablecoin companies received MiCA approval in February 2025. The stablecoin approval process under MiCA has been granted to contemporary cryptocurrency companies Circle and Crypto.com, along with Membrane Finance. Traditional financial institution Societe Generale has also received approval. Major Tether has chosen not to apply for registration through the MiCA framework.
USDe operates differently than standard stablecoins USDT and USDC through the implementation of its delta-hedging system, which maintains dollar pegging. USDe uses spot holdings, on-chain custody, and liquidity buffers as part of its mechanism to maintain dollar parity. To date, CoinMarketCap identifies USDe as the fourth biggest stablecoin worldwide, with a circulating value of $4.9 billion.
Market impact and industry response
The German exit of Ethena Labs reveals the obstacles that emerging crypto operations encounter when regulators adjust their oversight systems. The €233-billion stablecoin market attracts regulatory attention because government agencies develop safeguards based on standard financial system practices. The Monetary Agreements for Crypto Assets under MiCA strive to establish standard operational rules and clear classification definitions throughout the European Union for managing crypto assets.
Growing compliance regulations might force businesses in this field to redesign their European market strategies to follow local jurisdictional specifications. The regulatory environment created by MiCA and Germany’s rigorous standards led to Ethena’s exit from the market. Significant changes are likely to occur for future synthetic stablecoin operations across Europe.
