Ethena Labs Closes Business in Germany Following BaFin’s Crackdown

Ethena GmbH, the German crypto-focused subsidiary of the synthetic dollar protocol Ethena Labs, has officially ended all its operations in the country following an agreement with the German Federal Financial Supervisory Authority (BaFin). The company also announced that it will no longer pursue authorization from the EU’s new crypto framework, the Markets in Crypto Assets Regulation (MiCAR).

Ethena Labs Halts Business in Germany

The decision came after Ethena GmbH halted the minting and redeeming of its USDe stablecoin on March 21st. Since then, Ethena (EVI) Limited, based in the British Virgin Islands, has fully managed all activities without disruption. The move is part of a broader shift to simplify operations and avoid further regulatory challenges in the EU.

Ethena Labs stated in its latest announcement that all previously whitelisted users of Ethena GmbH have successfully transitioned to Ethena (BVI) Limited. These users now have no ties to the German entity. According to the company, Ethena GmbH no longer holds any direct customers or whitelisted users, making it inactive indefinitely.

Germany’s BaFin had earlier raised questions about how Ethena GmbH was managing its assets and whether it complied with all financial rules in the country.

Ethena Labs stressed that USDe, their stablecoin, remains fully backed and unaffected despite the shutdown. Users can continue to use the stablecoin as usual, and the token’s availability on exchanges has not been interrupted.

Despite Germany’s disagreement with Ethena Labs’ operations, it is not entirely pessimistic about cryptocurrencies. In September last year, investment company eToro launched crypto trading services in the country.

Not the End of the Road

Although Ethena Labs may be exiting the German market, this is by far not the end of the road for the project. According to its official website, the stablecoin project has over 662,000 users on-chain and boasts a total value locked (TVL) of 6.35 billion.

Additionally, the project is expanding its operations. In February, it received $100 million in funding to develop an institutional counterpart of its flagship synthetic stablecoin, USDe.