Germany’s Federal Financial Supervisory Authority (BAFIN) has rejected the Ecena Institute’s application to issue assets referenced tokens in crypto federal markets.
Regulators also raised concerns that SUSDE could constitute an unauthorized security offering.
According to Bafin’s Official NoticeThe application submitted by Ethena GmbH, a Frankfurt-based entity based on the Ethena Labs corporate structure, exhibited “significant flaws” in organizational practices and failed to meet MICAR requirements for asset preparation and capital adequacy.
Bafin quickly imposed enforceable supervisory measures, including banning further disclosure of USDE tokens in Germany, and ordered custodians to freeze reserve assets for the token.
In particular, some Stablecoin publishers face challenges under MICA regulations. Major European Exchanges Delisting Tether USD (USDT) because they were worried that the token could be non-compliant. However, authorities have not yet considered the USDT non-compliant.
Ordered to stop issuing USDE
However, under the subtraction clause, Ethena GmbH continued to issue tokens in Germany after applying for a permit on July 29, 2024.
Currently, approximately US$5.4 billion in USDE tokens are in circulation, most of which are published outside of Mikal’s effective execution and Germany.
Bafin has made its announcement that its actions will not affect USDE’s secondary market transactions, but will temporarily limit redemptions directly through Ethena GmbH. Since January 2025, Ethena BVI Limited, an affiliated entity based in the British Virgin Islands, has also encouraged the issuance of tokens.
Additionally, regulators appointed special representatives to monitor compliance and noted the possibility of additional actions, including a ban on disclosure of related securities.
Securities provided
Beyond operational shortcomings, Baffin has expressed “well-proven doubt” that the SUSDE token is eligible for security under German law and is published without a prospectus of approved securities.
Susde is a stub coin that supports the surrender achieved by staking USDE. Bafin’s concern comes from its financial structure and is suspected of profit promises built into the Susde token.
Bafin’s position introduces regulatory challenges for hybrid devices such as the Susde. Regulators are proactively assessing whether public distribution of such equipment requires compliance with securities laws, including disclosure and prospectus obligations.
The outcome of this classification could set precedents for similar crypto assets in the European Union.
Ethena Labs response
In response, Ethena Labs published a statement We have confirmed that we have been informed of Bafin’s decision to reject Ethena Gmbh’s MICAR application.
The company acknowledged the decision in its official statement, saying it was an “assessment of an alternative framework” for regulatory compliance.
Ecena has been added:
“Since our founding, Ecena has sought a variety of options and jurisdictions regarding regulatory frameworks globally. Mikal certification via Ethena GMBH has been one of the many options we have pursued.”
The company emphasized that the decision would not affect USDE mint and reimbursement activities facilitated by Ethena BVI Limited, which serves the “majority” of its users.
The company also rejects assumptions of a freeze on assets, claiming that all reserves remain available. This added that the terms of service will be revised next week.
Bafin’s rejection will enhance the increased scrutiny and synthetic yield equipment that have been targeted within or targeted within the European market after the implementation of MICA.
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