Ethena Labs Halts German Operations After BaFin Scrutiny Over USDe Token

Decentralized finance (DeFi) protocol Ethena Labs is ceasing its operations in Germany following regulatory concerns. The decision comes after the German financial regulator, BaFin, identified issues with Ethena's USDe token. Ethena Labs has agreed to wind down all activities of its German subsidiary, Ethena GmbH.

The company will no longer pursue authorization under the Markets in Crypto-Assets Regulation (MiCAR) in Germany. All previous German users will be onboarded to Ethena BVI, the protocol's entity in the British Virgin Islands. This move ensures service continuity for existing users.

BaFin's concerns reportedly stemmed from compliance failures and potential securities law violations tied to USDe. Ethena GmbH had already suspended minting and redeeming activities for USDe since March 21, 2025. Ethena's USDe maintains its dollar peg through a delta-hedging strategy, unlike stablecoins backed by fiat reserves.