eToro, a leading online trading platform, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) and has agreed to stop trading virtually all crypto assets for U.S. customers, according to the latest edition from the SEC.
The SEC has charged eToro with operating as an unregistered broker and clearing agency for facilitating the trading of crypto assets that are considered securities.
As part of the settlement, eToro has agreed to pay a $1.5 million fine and will limit its U.S. trading services to a limited number of digital currencies.
SEC Enforcement and eToro’s Response
The SEC investigation found that eToro has allowed US customers to trade cryptocurrencies on its platform since 2020, without running afoul of federal securities laws.
The regulator has determined that eToro’s services fall within the scope of broker-dealer and clearing agency regulation because certain crypto assets offered on the platform are considered securities.
In response, eToro has agreed to remove most digital currencies from its platform and only offer limited options to US traders going forward.
It is notable that the SEC is issuing its order as part of a broader effort to regulate the digital currency industry and ensure that trading platforms comply with existing securities legislation.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stressed that eToro’s decision to remove tokens offered as investment contracts from its platform demonstrates a willingness to comply with the established regulatory framework. Grewal added:
This resolution not only enhances investor protection, but also provides a path for other crypto intermediaries. The $1.5 million fine reflects eToro’s agreement to cease violating applicable federal securities laws while continuing its U.S. operations.
Additionally, as part of the settlement, eToro will allow its US customers to sell their remaining crypto assets within 180 days. After this period, any crypto assets that are considered securities and have not been sold will be liquidated by eToro and the proceeds will be returned to customers.
According to the press release, eToro agreed to the cease and desist order and the imposed fine without admitting or denying the SEC’s findings.
Future of eToro and crypto asset trading
Going forward, eToro’s US platform will only offer trading in three major cryptocurrencies: Bitcoin, Bitcoin Cash, and Ethereum. This marks a significant shift in the platform’s offerings as it strives to comply with SEC guidelines.
The removal of other tokens could impact the company’s user base in the US, as eToro was previously known for offering access to a wide range of digital assets.
The release revealed that the SEC’s investigation into eToro was conducted by the agency’s Crypto Assets and Cyber Unit. The case involved key officials and other members of the SEC’s enforcement team.
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