The German Federal Financial Supervisory Authority (BaFin) has taken measures against Ethena GmbH, an issuer of the ENA token, due to significant violations concerning their USDe token approval process.
BaFin's Actions Against Ethena GmbH
BaFin has prohibited 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 regulator also expressed concerns that Ethena GmbH may be offering securities in Germany without the required prospectus.
Ethena GmbH and the USDe Token
Frankfurt-based Ethena GmbH issues USDe, a crypto asset classified as an asset-referenced token under the Crypto Assets Regulation (MiCAR). The company claims that its asset reserves consist solely of other crypto assets and that price stability is maintained through an algorithm using hedging derivatives. Ethena GmbH operates under a MiCAR transitional provision allowing issuers of asset-referenced tokens in circulation before June 30, 2024, to continue their issuance until a formal license is granted or denied. The company submitted its license application on July 29, 2024, and has been issuing USDe tokens since June 28, 2024.
Ethena Labs' Response
Ethena Labs clarified that the BaFin decision does not affect 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 their plan to review their terms and conditions within the upcoming week.
In conclusion, BaFin has taken firm action against Ethena GmbH over identified violations, while Ethena Labs assured their users that this has minimal impact on the company's current operations.
