Germany’s financial supervisory authority, BaFin, has discovered serious issues in the approval process for a cryptocurrency token known as USDe, which is issued by a Frankfurt-based company. In response to these deficiencies, BaFin has enacted immediate supervisory actions including a suspension of the public offering of the token, as well as an order to freeze the company’s asset reserves that are managed by depositary agencies.
BaFin suspects that this company may have been offering investment securities in Germany without the necessary approved prospectus, leading to a potential ban on these offerings as additional regulatory actions are being discussed.
Currently, there are about 5.4 billion USDe tokens in circulation. A significant number of these tokens were issued outside of Germany prior to the implementation of the Markets in Crypto-Assets Regulation (MiCA). A subsidiary based in the British Virgin Islands has also been active in issuing tokens since the beginning of 2025.
The examination by BaFin revealed failures in the organization of the company’s business practices, particularly concerning compliance with MiCA’s requirements regarding asset reserves and capital. The regulator will provide further guidance once the approval process is finalized.
The financial services sector, known for its high value, is subject to stringent rules designed to prevent illicit activities and market manipulation. Similar stringent protocols exist across various asset classes, such as those in foreign exchange, which are overseen by multiple jurisdictions but often lack cohesive international regulation.
The situation surrounding the USDe token intensified, as BaFin conducted further investigations into whether other tokens related to USDe, specifically labeled “sUSDe,” were being offered without the requisite prospectus. These tokens, linked to returns for holders, were reportedly exchanged for USDe tokens.
In light of BaFin’s findings, multiple protective measures have been put in place. These actions include freezing the company’s asset reserves, limiting executive access, and halting any new business operations, even restricting access to the company’s website. While these regulatory measures are still in the processing phase, holders of USDe tokens are unable to redeem their tokens through the company, although trading on secondary markets continues.
As the regulatory landscape continues to evolve, holders and potential investors in the USDe token and related financial products will need to stay informed about the ongoing developments from BaFin and the results of its compliance assessments.