BaFin, Germany's financial regulatory authority, has banned all public sales of Ethena GmbH's USDe token, a synthetic dollar, due to serious compliance failures and potential violations of EU's MiCAR regulations. The regulator mandated Ethena to freeze reserve assets supporting the token, close its website, and stop onboarding new customers, suspecting that the company sells securities without the required prospectus. The USDe and its related sUSDe tokens, which allow for exchange between the two, are at the center of this enforcement action. While primary sales and issuance of USDe are explicitly banned, BaFin has stated that secondary market transactions involving the token will not be prohibited. This regulatory action marks a significant move in the ongoing scrutiny of digital assets within the EU framework, particularly regarding securities regulations and compliance standards that companies must adhere to.

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