BaFin Finds Serious Deficiencies in Ethena’s USDe Stablecoin

BaFin, Germany's financial supervisory authority, identified "serious deficiencies" in Ethena's synthetic USDe stablecoin, which has a market cap of $5.4 billion.

• Ethena will explore alternative frameworks after its application under the MiCAR regulatory framework was denied.
• Deficiencies include issues with business organization and violations of MiCAR requirements related to asset reserves and capital compliance.
• BaFin suspects that Ethena GmbH is offering securities in Germany through 'sUSDe' tokens without a required prospectus.
• Ethena's ENA token dropped 6.5% within 24 hours following the announcement.