Ethena Pulls Out of Germany Amid Regulator's USDe Stablecoin Scrutiny

Ethena GmbH will sunset its operations in Germany after encountering regulatory roadblocks there, according to an X post published Tuesday by Ethena. 

The Frankfurt-based entity of layer-1 blockchain Ethena issues a U.S. dollar-backed stablecoin called USDe. The synthetic dollar—the fourth-largest stablecoin by market cap—offers yield through Ethereum token staking and delta hedging derivatives positions, but its status as a security in Germany remains unclear. 

Under a new deal between Ethena Labs and local regulators, Ethena GmbH will no longer pursue a Markets in Crypto-Assets Regulation (MiCA) license that would enable it to conduct business in Germany, the company said in the X post. 

“We have agreed with BaFin to wind down all activities of Ethena GMBH and will no longer be pursuing the MiCAR authorization in Germany,” Ethena Labs wrote in the post. 

The protocol’s existing users have already migrated to the services of Ethena BVI, the blockchain’s British Virgin Islands entity, Ethena Labs added.

Meanwhile, holders of Ethena's synthetic dollar can no longer redeem USDe through Ethena GmbH, but USDe trading on secondary markets remains unaffected.

The winding down of Ethena GmbH comes several weeks after Germany's main crypto regulator ordered the entity to halt minting and redeeming for USDe, beginning on March 21, due to “serious deficiencies” in the protocol's compliance with local laws and regulations. At the time, the regulator imposed several other restrictions on Ethena GmbH, blocking its asset reserves and website, and appointing a special representative to monitor the protocol's operations.

The entity's shutdown also comes at a time when Germany is cracking down on digital assets platforms more broadly. The country's authorities shuttered 47 crypto exchanges late last year in an effort to curb illicit financial flows, a statement from German federal police shows. 

Ethena's native token, ENA, is trading at $0.28, down 6% in the last 24 hours and more than 81% from its all-time high price, CoinGecko data shows. 

Edited by James Rubin