eToro USA will halt nearly all crypto trading activity following an agreement with the Securities and Exchange Commission (SEC). The settlement also requires eToro to pay a $1.5 million fine. eToro has agreed to the settlement without admitting or denying the allegations.
Going forward, eToro will only offer for US customers trading in Bitcoin, Bitcoin Cash, and Ether. Customers holding other digital assets will have 180 days to sell these holdings. The SEC has not claimed any fraud or harmed investors.
Under its current leadership, the SEC has taken the view that all crypto are digital securities an d thus fall under current federal securities law.
Like many other US-based crypto trading platforms, eToro has received multiple state licenses to offer crypto trading in the US.
eToro operates in many jurisdictions worldwide. It is licensed in Europe, the UK, Australia, the UAE, and elsewhere. Its main office is in Tel Aviv.
The SEC claims that eToro USA LLC operated as an unregistered broker and unregistered clearing agency in connection with its trading platform, which facilitated the buying and selling of certain crypto assets as securities.
The SEC’s order alleges that, since at least 2020, it provided US customers the ability, through eToro’s online trading platform, to trade crypto but did not comply with the registration provisions under current securities laws.
Gurber Grewal, Director of the SEC’s Division of Enforcement, said that by removing most digital assets eToro is now compliant and operating within the established regulatory framework.
“The $1.5 million penalty reflects eToro’s agreement to cease violating applicable federal securities laws as it continues its US operations.”
On X, eToro stated that the settlement will enable it to continue operations in the US – minus the altcoins. eToro has always offered more traditional trading, such as stocks, options, and ETFs.
Yoni Assia, eToro CEO & co-founder, issued the following statement on the agreement:
“This settlement allows us to move forward and focus on providing innovative and relevant products across our diversified US business. US users can continue to trade and invest in stocks, ETFs, options, and three of the largest cryptoassets. As an early adopter and global pioneer of cryptoassets, as well as a financial services provider for regulated securities, it is important for us to be compliant and to work closely with regulators around the world. We now have a clear regulatory framework for cryptoassets in the UK and Europe and we believe we will see similar in the US in the near future. Once this is in place, we will look to enable trading in the cryptoassets that meet this framework.”
In a blog post, eToro noted that it has long been a provider of traditional investing since before crypto. As an early adopter of digital assets, it is “important for us to adhere to regulatory requirements.”
“We now have a clear regulatory framework for cryptoassets in our home markets of the UK and Europe, and we believe we will see additional regulatory clarity in the US in the near future. Once this is in place, we will look to enable trading in the cryptoassets that meet this framework. Nothing in the SEC’s order prevents us from making future changes to the assets we make available to US customers.”
The settlement with the SEC is another blow for the US digital asset industry, which has long sought bespoke rules in which to operate. The fragmented approach today highlights the shortcomings of the US regulatory system as security laws were established long before crypto and, obviously, the internet. Some insiders have said that policymakers have compelled digital asset innovation to move outside the US. Many observers have also criticized the SEC for taking a “regulation by enforcement approach.” At the same time, Congress has also fallen short, having failed to pass legislation that creates bespoke rules that enable digital asset innovation while protecting investors.
