Germany's Financial Watchdog Makes First Major Enforcement Move Under the EU's New Crypto Regulatory Framework, Ordering Frankfurt-Based Ethena GmbH to Shut Down Operations and Liquidate Its USDe Stablecoin Business

The decision comes amid a broader push to impose tighter oversight on crypto firms across the bloc. The Federal Financial Supervisory Authority (BaFin) issued the order

Germany’s financial watchdog has made its first major enforcement move, ordering Frankfurt-based Ethena GmbH to shut down and liquidate its USDe stablecoin business.

The Federal Financial Supervisory Authority (BaFin) is shutting down Ethena GmbH’s operations and liquidating its USDe stablecoin enterprise, the regulator announced on Monday. The move comes amid a broader push to impose tighter oversight on crypto firms.

The decision follows earlier supervisory sanctions imposed in March due to what BaFin called “serious deficiencies” in Ethena’s organizational setup and compliance with the Markets in Crypto-Assets Regulation (MiCA).

Ethena GmbH was granted permission to issue asset-referenced tokens in Germany, operating in accordance with the transitional provisions of MiCA. This framework allowed issuers that had already begun operations to continue doing so until their license applications were decided.

“Ethena GmbH applied for authorization in Germany after the new legal framework for the issuance of crypto-assets came into force in January 2024 with MiCA,” BaFin said.

“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 out by Ethena (BVI) Limited.”

Ethena Labs, the firm behind synthetic stablecoin USDe, is shutting down its German subsidiary after financial watchdog BaFin ordered the closure and liquidation.

Ethena GmbH had applied for full authorization under MiCA to continue issuing its dollar-pegged token. However, the company withdrew its license application on April 3, rendering its legal basis to operate in the EU null and void.

Following this, BaFin is now prohibiting further transactions and ordering a structured redemption of all circulating USDe tokens, a process that will be placed directly under the regulator’s supervision.

The move comes as part of a broader crackdown on crypto firms in Europe. Earlier this year, France’s financial regulator imposed sanctions on Meta for offering unregistered investment services via its blockchain initiative.

Meanwhile, Italy’s financial regulator has reportedly opened an investigation into crypto exchange Binance for allegedly operating in the country without authorization.output: Germany's financial watchdog has ordered the closure and liquidation of Ethena GmbH's operations in the country, shutting down the subsidiary of synthetic stablecoin developer Ethena Labs.

The move comes as part of a broader push to impose tighter oversight on crypto firms.

The Federal Financial Supervisory Authority (BaFin) said it has imposed sanctions on Ethena GmbH for violations that arose during the company’s application for authorization under the Markets in Crypto-Assets Regulation (MiCA).

Earlier this year, BaFin had announced supervisory sanctions against Ethena GmbH for deficiencies in its organizational structure and capital endowment, particularly regarding asset segregation and the quality of reserves. These deficiencies affected the company's application for authorization under MiCA.

Ethena GmbH was granted permission to issue asset-referenced tokens in accordance with the transitional provisions of MiCA. This framework allowed issuers who had already begun operations to continue doing so until their license applications were decided. Issuers that applied for authorization had until June 30, 2024, to transition to the new legal framework.

However, Ethena GmbH applied for authorization in Germany after the new legal framework for the issuance of crypto-assets came into force in January 2024 with MiCA. Therefore, the transitional provisions no longer applied to the company.

“Consequently, the legal basis for Ethena GmbH’s business activities in Germany has ceased,” BaFin said.

The regulator has now prohibited Ethena GmbH from further transactions and ordered a structured redemption of all USDe tokens in circulation.

In addition to shutting down the company’s operations, BaFin has imposed a € 600,000 coercive penalty and froze Ethena’s ability to move or dispose of funds to ensure the payment of creditors' obligations.

Ethena Labs has shifted all relevant users to a different entity, Ethena (BVI) Limited, and there is “no ongoing relationship” with the German subsidiary, the firm said.

The firm had already paused mint and redeem functions for USDe in March when BaFin first stepped in.

Europe's Stablecoin Landscape Under MiCA

Ethena’s forced exit marks a significant development in the regulatory landscape for stablecoin issuers.

MiCA, which came into full force in January, requires issuers to maintain properly backed reserves, segregate user assets and submit regular reports. Issuers also need to meet strict capital requirements and maintain a robust organizational structure.

According to regulators, that model is now under question. In its decision, BaFin found that Ethena GmbH failed to meet MiCA’