The German Federal Financial Supervisory Authority, BaFin, has ordered Ethena GmbH to stop all public sales of its stablecoin USDe.

This comes after the German financial markets regulator found serious flaws in Ethena GmbH’s USDe approval process.

Per the BaFin announcement on March 21, 2025, the public sales of Ethena (ENA)’s synthetic dollar Ethena USDe violates the European Union’s Markets in Crypto Asset Registration rules.

With stablecoin regulation being one of the EU’s major enforcement priorities, a lack of MiCAR compliance has become a key obstacle for stablecoin issuers.

“The BaFin also has reasonable grounds to suspect that Ethena GmbH in Germany sells securities in the form of sUSDe tokens from Ethena OpCo. Ltd. without the required prospectus,” the regulator said.

BaFin has therefore ordered Ethena to immediately cease any sales to the public.

Enforcement measures

The enforcement measures include a freeze on USDe reserves held by Ethena’s custodian. Additionally, Ethena GmbH is required to shut down its website portal and stop registering new customers.

While Ethena GmbH has been prohibited from selling USDe, the order only applies to primary sales. In this case, BaFin’s order does not affect secondary sales. Ethena Labs issued a statement on X following the news.

“We were informed today that Ethena GmbH’s application under the MiCAR regulatory framework will not be approved. While we are disappointed by this decision, we will continue to evaluate alternative frameworks.”

According to the crypto platform, BaFin’s order doesn’t affect the stablecoin’s listing.

The decision will also not affect minting and redemption through Ethena Limited, the company’s entity registered in the British Virgin Islands, which handles the majority of USDe minting.

“USDe remains fully backed [and] no assets have been “frozen”” Ethena noted.