Ethena Labs is winding down its operations in Germany after regulators flagged compliance issues with its USDe stablecoin. The German Federal Financial Supervisory Authority (BaFin) froze USDe token offerings in March, citing potential breaches of securities laws. Following this, Ethena Labs announced on April 15 that it would cease all activities of its subsidiary, Ethena GmbH, and would not pursue further authorization under the EU's Markets in Crypto-Assets Regulation (MiCAR). Since March 21, Ethena GmbH has not conducted any minting or redeeming of USDe, with all affected users transitioned to a different subsidiary, Ethena (BVI) Limited. USDe, which holds a significant position in the stablecoin market, utilizes a delta-hedging strategy to maintain its dollar peg. The exit from Germany highlights the increasing scrutiny and regulatory challenges that crypto asset firms face in the European market, particularly under tightened frameworks like MiCAR, which sets stringent compliance requirements for stablecoin issuers.

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