Decentralized finance protocol Ethena has agreed to wind down its operations in Germany following a regulatory investigation by BaFin, citing ‘serious deficiencies’ in its USDe token and failure to comply with approval requirements. The move is likely to have significant implications for the DeFi market.
Decentralized finance (DeFi) protocol Ethena has announced its decision to wind down its operations in Germany, following an investigation by BaFin, the country’s finance regulator. The move comes after BaFin identified ‘serious deficiencies‘ in Ethena‘s USDe token and found that the company was offering securities in Germany without approval.
Background on Ethena’s Token
Ethena is a yield-generating protocol with $4.9 billion in total value locked (TVL). Its USDe token, dubbed a ‘synthetic dollar,’ is backed by bitcoin (BTC), ether (ETH), and other cryptocurrencies. The token has seen significant volatility recently, with its price down 2.88% in the past 24 hours.
Regulatory Action
BaFin identified several issues with Ethena‘s USDe token, including a lack of transparency and inadequate risk management practices. As a result, BaFin required Ethena to obtain approval for the token’s sale in Germany before it could be offered to investors. However, the company failed to comply with these requirements.
Consequences and Next Steps
Ethena has agreed to wind down its operations in Germany, onboarding all existing users to its entity in the British Virgin Islands (BVI). This move is intended to ensure compliance with regulatory requirements and protect investors.
‘We have agreed with BaFin to wind down all activities of Ethena GMBH and will no longer be pursuing the MiCAR authorization in Germany,’ Ethena stated in a tweet. ‘All previous users will be onboarded to Ethena BVI, the protocol’s entity in the British Virgin Islands.’
Impact on the DeFi Market
The decision by Ethena to wind down its operations in Germany is likely to have significant implications for the DeFi market as a whole. The move highlights the importance of regulatory compliance and risk management practices in the industry.
As the yield-generating protocol ENA token continues to experience volatility, investors are likely to be watching the situation closely for further developments.
- coindesk.com | Ethena Agrees With Regulator to Withdraw From German Market
