Ethena Labs has abandoned the plan to seek EU-based authorization for its USDe stablecoin. The crypto startup will wind down the activities of its German branch Ethena GMBH.
Ethena Labs has agreed with the German financial authorities (BaFin) to abandon attempts at authorizing its USDe stablecoin under MiCA regulations. Ethena Labs operated in the country under a previous agreement for leeway after the enforcement of MiCA.
Despite the attempts of Ethena to offer a regulated stablecoin, BaFin banned the startup from offering its stablecoin in Germany. Ethena Labs announced no assets have been frozen, either fiat or on-chain. However, the crypto protocol was aware back in March that BaFin was probably not going to extend more time to build a MiCA-compliant asset.
As a result, all German buyers of USDe have been transferred to the international branch of Ethena Labs. The startup announced the change as it stopped issuing and redeeming USDe through Ethena GMBH since March 11, 2025.
We have agreed with BaFin to wind down all activities of Ethena GMBH and will no longer be pursuing the MiCAR authorization in Germany.
As communicated previously, Ethena GmbH has not conducted any mint or redeem activity since March 21, 2025, and all activity has been carried…
— Ethena Labs (@ethena_labs) April 15, 2025
German users will still retain their access to USDe, but this time, the asset will be issued by Ethena BVI, outside the requirements and protections of German financial laws. German traders will retain their right to own USDe, independent of the issuer.
USDe was one of the most contentious stablecoins, as its dollar-based value is algorithmically formed. MiCA regulations have been harsh to the stablecoin space, with just 11 assets fitting the bill for problem-free distribution in the EU. USDe and its passive income opportunities for staking are outside the scope of MiCA, which mostly focuses on fiat-backed tokens with provable banking reserves.
Ethena aims to evolve USDe use cases
Ethena continues to evolve its USDe asset, while aiming for more representation on DeFi lending protocols. The asset will soon reveal a regular proof-of-reserves program, to show evidence the token was also protected by a crypto reserve.
The first reserve claim for USDe was published on April 11. According to Ethena’s own reporting, the supply of tokens is over $5B, backed by assets valued at $5.1B.
Despite the transparency, USDe remains at best a crypto-backed stablecoin, insufficient for MiCA certification. USDe reports reserves with a basket of approved coins and tokens, including BTC, ETH, stETH, mETH, WBETH, SOL, USDT, USDC, USDtb, and sUSDS. Previously, Ethena Labs posted a monthly attestation, expanding the report to account for all on-chain assets.
Ethena Labs also carries over $8.7B in crypto assets, based on a wallet tagged by Arkham Intelligence.
Ethena decreases USDe supply
The EU and German distribution of USDe was a contentious issue for Ethena. At the same time, Ethereum (ETH) lost its bullish prognosis, meaning Ethena could not rely on predictable funding fees from exchanges.
As a result, the supply of USDe decreased from a peak above $6.1B down to $4.9B. Trading volumes also slowed down to around $50M. USDe remains widely used for DeFi, with a big part of its volumes on Uniswap and other DEXs. Staked SUSDe, however, expanded, up to 2.15B, trading at a premium of $1.16.
For the same three-month period, ENA also lost value, from around $0.93 down to $0.29. The token is on track to erase all gains since September 2024, when it traded at around $0.20.
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