The German Federal Financial Supervisory Authority (BaFin) has issued a warning about serious violations in the approval process for Ethena's USDe stablecoin.

According to the official announcement, BaFin determined that Ethena GmbH – a subsidiary of Ethena based in Germany – did not fully comply with the necessary legal requirements to issue USDe in the country. In response, BaFin immediately issued an order prohibiting Ethena from continuing to issue USDe to the public in Germany. Additionally, the authority requested the freezing of all reserve assets related to USDe's operations in the German market to ensure transparency and protect investors.

Ethena subsequently confirmed that its application for operating license in Germany was rejected. While expressing disappointment with the decision, Ethena stated that they remain committed to seeking other more suitable legal jurisdictions to ensure their business is not disrupted.

Despite the obstacles in Germany, Ethena affirmed that USDe remains fully collateralized and is not "frozen". The company also emphasized that this incident does not affect users and assured that USDe's global operations continue to proceed normally.