eToro, a leading online trading platform, has reached a settlement with the US Securities and Exchange Commission (SEC). The settlement requires eToro to halt trading nearly all crypto assets for US customers, as per the latest SEC announcement.
SEC Enforcement and eToro’s Response
The SEC’s investigation revealed that since 2020, eToro had been allowing US customers to trade crypto assets on its platform without adhering to federal securities laws. The SEC determined that eToro’s services were in violation of broker-dealer and clearing agency regulations because certain crypto assets offered on the platform were classified as securities.
In response to these findings, eToro agreed to remove the majority of digital currency assets from its platform, limiting its offerings for US traders. This move aligns with the SEC’s broader initiative to regulate the digital currency industry and ensure compliance with existing securities laws.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, noted that eToro’s decision to eliminate tokens offered as investment contracts from its platform reflects a commitment to adhering to the established regulatory framework. Grewal stated, “This resolution not only enhances investor protection but also offers a pathway for other crypto intermediaries. The $1.5 million penalty reflects eToro’s agreement to cease violating applicable federal securities laws as it continues its U.S. operations.”
As part of the settlement, eToro will allow its US customers to sell their remaining crypto assets within 180 days. After this period, any unsold crypto assets deemed securities will be liquidated by eToro, and the proceeds will be returned to the customers. The release clarified that eToro’s agreement to the cease-and-desist order and the imposed penalty was made without admitting or denying the SEC’s findings.
Future of eToro and Crypto Asset Trading
Looking ahead, eToro’s platform in the US will be restricted to trading only three major cryptocurrencies: Bitcoin, Bitcoin Cash, and Ethereum. This significant change in the platform’s offerings aims to ensure compliance with SEC guidelines.
The removal of other tokens is likely to affect eToro’s user base in the US, as the platform had previously been known for providing access to a wide range of digital assets. However, this move is seen as a necessary step to continue operating within the regulatory framework established by the SEC.
The SEC’s investigation into eToro was conducted by the agency’s Crypto Assets and Cyber Unit, involving key officials and members of the SEC enforcement team. This case underscores the SEC’s commitment to regulating the digital currency market and protecting investors.
eToro’s settlement with the SEC marks a pivotal moment for the platform and the broader crypto trading landscape in the US. As the industry continues to evolve, adherence to regulatory guidelines will be crucial for platforms looking to operate successfully within the market.
