Ethena GmbH, domiciled in Frankfurt am Main, is the issuer of an asset-referenced token called USDe. An asset-referenced token is a crypto-asset that purports to maintain a stable value by referencing other values, rights or currencies (Article 3 of the Markets in Crypto-Assets Regulation – MiCAR).

Ethena GmbH states that it exclusively holds other crypto-assets as reserve assets. An algorithm purportedly keeps the value of one USDe token stable at the level of one US dollar using hedging derivatives.

Transitional provision under MiCAR

Ethena GmbH entered the German market using a transitional provision under MiCAR. This provision allows issuers that issued asset-referenced tokens in accordance with applicable law before 30 June 2024 to continue to do so until they are granted or refused an authorisation. This is subject to the condition that they apply for the relevant authorisation before 30 July 2024. Ethena GmbH submitted the application for authorisation on 29 July 2024.

Ethena GmbH has been issuing its USDe token in Germany since 28 June 2024. A total of approximately 5.4 billion tokens are currently in circulation. The majority of these tokens were issued outside Germany before 28 June 2024 and before MiCAR became applicable. While the USDe token was initially issued exclusively by Ethena GmbH, the token has also been issued by Ethena BVI Limited, domiciled in the British Virgin Islands, since 1 January 2025.

Serious shortcomings in the authorisation procedure

In the ongoing authorisation procedure, BaFin has identified serious shortcomings in the company’s business organisation as well as violations of the requirements under MiCAR, such as those relating to the reserve of assets and compliance with own funds requirements. BaFin will issue another announcement once the authorisation procedure has concluded.

Supervisory measures

To protect Ethena GmbH’s ability to meet its obligation towards its customers, BaFin has ordered the following measures:

• Instruction to freeze the reserve of assets for the tokens issued by Ethena GmbH (“freezing of assets”)
• Restrictions on the powers of disposal exercised by the managing directors of Ethena GmbH in relation to this reserve of assets
• Instruction to close Ethena GmbH to new business with customers, in particular by blocking the Ethena GmbH website
• Appointment of a special representative to monitor the measures

BaFin’s measures are not yet final.

Holders of USDe tokens can temporarily no longer redeem them with Ethena GmbH. However, trading in USDe tokens on the secondary market is currently unaffected by BaFin’s measures.

BaFin is the competent authority in Germany for authorisation procedures under MiCAR. The European Central Bank (ECB), the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), with which BaFin is in contact, are involved in the procedure.

Announcement of suspicion

BaFin also has sufficient grounds to suspect that Ethena GmbH is offering securities to the public in Germany in the form of sUSDe tokens from Ethena OpCo Ltd. without the required prospectus.

The USDe and sUSDe tokens are linked in such a way that investors can obtain an sUSDe token in exchange for a USDe token. This sUSDe token grants investors the right to the return of the USDe token along with an additional yield.