DeFi Protocol Ethena Exits German Market After BaFin Scrutiny
15.04.2025 17:01
Decentralized finance protocol Ethena announced it will wind down its operations in Germany following critical feedback from BaFin, Germany's financial regulator. BaFin highlighted serious deficiencies in Ethena's USDe token, a synthetic dollar backed by assets such as BTC and ETH, and pointed out that the company was offering unapproved securities. Consequently, Ethena has decided not to pursue MiCAR authorization in Germany and will onboard its previous users to its entity in the British Virgin Islands. This move comes at a time when the protocol, which has $4.9 billion in total value locked (TVL), is witnessing a decline in its native ENA token, which has fallen by 2.88% over the past 24 hours. The decision underscores the ongoing challenges faced by DeFi platforms in navigating global regulatory environments and raises questions about future compliance and market positioning for Ethena.
The regulatory setback, evidenced by BaFin's strong stance on the deficiencies of Ethena's USDe token, is likely to exert downward pressure on ENA in the short term. Investors might remain cautious due to increased regulatory uncertainty and historical trends where similar actions led to prolonged volatility. In the long term, if Ethena successfully mitigates its compliance challenges and stabilizes its operational structure through the relocation of its user base, the negative impact may lessen. However, the immediate market dynamics—reflected in the recent 2.88% decline—suggest a cautious outlook with potential further short-term downside before any recovery ensues.