The German Federal Financial Supervisory Authority (BaFin) has taken enforcement measures against Ethena GmbH, the issuer of the ENA token, citing serious deficiencies in the company’s approval process for its USDe token. As part of the directive, BaFin banned Ethena GmbH from further offering USDe tokens to the public and instructed the company to freeze the relevant asset reserves through its custodian.
A special officer appointed by BaFin will monitor compliance with these measures. The financial regulator also expressed concerns that Ethena GmbH may be offering securities in Germany without the required prospectus.
Frankfurt-based Ethena GmbH issues USDe, a crypto asset classified as an asset-referenced token under the Crypto Assets Regulation (MiCAR).
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Ethena GmbH claims that its asset reserves consist solely of other crypto assets and that price stability is maintained through an algorithm that uses hedging derivatives. The company operates under a MiCAR transitional provision that allows issuers of asset-referenced tokens that were in circulation before June 30, 2024, to continue issuing them until a formal license is granted or rejected. Ethena GmbH submitted its license application on July 29, 2024, and has been issuing USDe tokens in Germany since June 28, 2024.
In response to BaFin’s actions, Ethena Labs clarified that the decision does not impact the listing, minting or redemption of USDe tokens provided by Ethena BVI Limited, which serves the majority of its users. The company emphasized that USDe remains fully backed and no assets have been frozen. Ethena Labs also announced that it plans to review its terms and conditions within the next week.
*This is not investment advice.