12th September 2023 – (New York) eToro has agreed to pay $1.5 million in penalties to resolve allegations by the U.S. Securities and Exchange Commission (SEC) that it operated as an unlicensed broker and clearing agency since at least 2020. As part of the settlement, eToro will significantly curtail its cryptocurrency offerings in the United States, limiting trading to Bitcoin, Bitcoin Cash, and Ethereum for its American customers.
The settlement, announced on 12th September, mandates that eToro discontinue trading and transactions for all other cryptocurrencies within 187 days, liquidating any existing assets in these categories. U.S. customers will receive proceeds equivalent to their account balances related to these assets.
Gurbir S. Grewal, the SEC’s Director of Enforcement, highlighted the cooperative nature of the settlement with eToro, suggesting it could serve as a compliance model for other crypto intermediaries. “By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework,” said Grewal. The $1.5 million penalty highlights the agreement to halt further violations of federal securities laws.
The decision by eToro to limit its U.S. operations to only a few cryptocurrencies may set a precedent for how the SEC will treat most other digital assets as securities, potentially influencing future regulatory actions. This regulatory perspective has been reinforced by past decisions made by eToro, such as the delisting of Ripple (XRP) and three other cryptocurrencies in 2020 following SEC litigation against Ripple.
Despite the restrictions in the U.S., eToro continues to expand its services elsewhere. The company recently received a CASP approval from CySEC, enabling it to offer digital asset services across all EU countries.
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