German Regulator Identifies ‘Deficiencies’ in Ethena’s USDe Stablecoin

The German financial supervisory authority BaFin said it identified “serious deficiencies” in Ethena’s synthetic USDe stablecoin.

Ethena is the yield-generating protocol. The stablecoin has a market cap of $5.4 billion.

Ethena said on X that it will “continue to evaluate alternative frameworks,” after being notified that the “application under the MiCAR regulatory framework will not be approved.”

In a statement, BaFin said that the deficiencies are related to the “bank’s business organization and violations of MiCAR requirements, such as those regarding asset reserves and compliance with capital requirements.”

“BaFin also has reasonable grounds to suspect that Ethena GmbH is publicly offering securities in Germany in the form of ‘sUSDe’ tokens of Ethena OpCo. Ltd. without the required securities prospectus,” the regulator said.

Ethena’s ENA tokenhad dropped 6.5% in the past 24 hours, extending losses following the announcement, according to CoinMarketCap data.