Less than a month after authorities found deficiencies in its dollar-pegged USDe stablecoin, Ethena Labs is consolidating its activities in Germany.
According to a statement released on April 15, Ethena Labs and Germany’s Federal Financial Supervisory Authority, or BaFin, have agreed to shut down all of the activities of its local subsidiary, Ethena GmbH.
Regarding the Markets in Crypto-Assets Regulation, Ethena Labs stated that it “will no longer be pursuing MiCAR authorization in Germany.”
Ethena Labs Exits Germany
The business reaffirmed that since March 21, the day BaFin suspended the stablecoin’s operations, Ethena’s German subsidiary has not engaged in any minting or redeeming operations for USDe. The German regulator found compliance issues and possible securities law violations related to USDe.
According to the company, “all allowed mint and redeem users who previously interacted with Ethena GmbH have been onboarded with Ethena (BVI) Limited at their request and have no ongoing relationship with Ethena GmbH whatsoever.”
Ethena’s USDe maintains its dollar peg using an automated delta-hedging strategy that combines spot holdings, onchain custody, and liquidity buffers, unlike well-known stablecoins USDt and USDC.
According to CoinMarketCap, USDe has a total circulating value of $4.9 billion, making it the fourth-largest stablecoin.
MiCA Tightens Restrictions on Using Stablecoins
MiCA is a comprehensive framework that enforces stringent compliance standards and consumer protections for cryptocurrency usage throughout the European Union.
Stablecoin issuers must keep reserve assets separate from user assets, have sufficient reserves to support their tokens and comply with regular reporting requirements to meet the new regulations.
Ten stablecoin issuers, including Circle, Crypto.com, Societe Generale, and Membrane Finance, were authorized under MiCA as of February.
According to Circle’s senior director of EU strategy and policy, Patrick Hansen, five US dollar-pegged stablecoins and ten euro-pegged stablecoins have been authorized thus far, Cointelegraph reported.
The USDt issuer Tether, however, is conspicuously missing from the list because it has chosen not to pursue MiCA registration at this time.
