After months of locking horns, Ethena Labs has finally managed to shake off the heat from Germany’s financial regulator, BaFin, bringing a long-standing dispute over the USDe stablecoin to a close. What began as a fiery standoff over compliance has now ended with a formal redemption plan and a clean exit from the European market.
Image 1 (Source: CediRates)
The core issue? Ethena’s German arm, Ethena GmbH, found itself in BaFin’s crosshairs after allegedly rolling out interest-bearing tokens without proper authorisation under the EU’s MiCA framework. The watchdog wasn’t about to let that slide and came down on the company like a tonne of bricks.
Red Flags and Regulatory Clampdown
It all kicked off back in March, when BaFin took the gloves off and accused Ethena GmbH of flouting EU crypto rules by issuing sUSDe tokens without a valid licence. That’s a major no-no under the Markets in Crypto-Assets (MiCA) regulation. BaFin didn’t just wag a finger—they slammed the brakes on Ethena’s local operations. The regulator froze its reserves, took down its website, blocked access to its trading platform, and closed the door to new users. In short, it was a full-scale shutdown.
Rather than stick around for more bruising, Ethena Labs decided not to test their luck. By 21 March, the firm called time on all minting and redemption of USDe within Germany. They also pulled the plug on their MiCA licence application, which had already hit a dead end months earlier. That move signalled Ethena was ready to pack up and call it quits—at least within the EU.
Ethena Labs chegou a um acordo com o regulador financeiro da Alemanha, BaFin, sobre sua stablecoin USDe. O período de resgate termina em 6 de agosto. Após isso, demandas devem ser dirigidas à afiliada nas Ilhas Virgens. pic.twitter.com/kEO0Fo01oA
— Profito Club (@profitoclubx) June 26, 2025
Redemption Window and Wind-Down Agreement
Fast forward to June, and cooler heads have prevailed. A 42-day redemption period was agreed upon, giving German users until 6 August to cash out their tokens through Ethena GmbH. Overseeing the process will be a BaFin-appointed supervisor, whose job is to make sure everything’s above board. Once the deadline comes and goes, the shutters will come down on Ethena GmbH for good—not just in Germany, but across the European Economic Area (EEA).
After that, any remaining claims will have to go through Ethena’s offshore operation in the British Virgin Islands, known as Ethena (BVI) Ltd. It’s a handover that ties up loose ends neatly, giving users a clear path forward while closing the chapter on Ethena’s European presence.
In a nutshell, BaFin and Ethena have managed to part ways without throwing punches. The redemption plan offers a fair shake to users, and Ethena walks away with a clean slate—no lawsuits, no frozen assets, and no bitter aftertaste.
Image 2: (Source: CriptoFacil)
Leaving Europe in the Rear-View
Despite being shown the door, Ethena’s broader project hasn’t been left high and dry. USDe tokens—currently totalling more than 5.6 billion units—are still making the rounds in global markets. Most of these tokens were minted before the MiCA rulebook came into play, so they’ve dodged the regulatory net in Europe. Outside the EU, it’s still business as usual.
That said, Ethena has kept its cards close to its chest about what’s next. There’s no word yet on whether the firm plans to dip its toes back into the European pond. A return bid for regulatory approval isn’t off the table, but they’d need to come back with their house in order—no more grey areas or half-measures.
Read also: Solace in Satoshis: Bitcoin Rallies After Trump Applauds Mideast Ceasefire
What this episode shows is that the crypto space isn’t the Wild West anymore. Regulators are circling, and there’s no room for cutting corners. If you don’t tick all the boxes, you’re bound to get clipped. Ethena learned this the hard way—they pushed the envelope and had to fold when the heat got too much.
Still, it’s not all doom and gloom. Ethena managed to strike a deal that takes the sting out of an otherwise bruising encounter. The 42-day redemption window isn’t open-ended, but it’s a fair crack for token holders to square things away. BaFin didn’t slam the door shut without notice; instead, they offered a way out for users while sending a clear message to crypto operators: follow the rules, or face the consequences.
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