In a notable regulatory move, trading platform eToro has agreed to pay $1.5 million to settle charges with the U.S. Securities and Exchange Commission (SEC). The settlement comes after the SEC alleged that eToro operated as an unregistered broker and clearing agency while facilitating trades in crypto assets deemed as securities.
The SEC’s statement revealed that eToro had not complied with federal securities laws since at least 2020. As part of the settlement, eToro has committed to ceasing violations of these laws and will limit its U.S. crypto offerings. From now on, U.S. users can only trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH) on the platform. However, eToro emphasized that these restrictions affect only a small fraction—about 3%—of its customers’ crypto holdings by dollar value.
For most users, the transition will be seamless. An eToro spokesperson assured that positions in assets redeemable to the eToro crypto wallet can remain open without requiring user intervention. Only those positions that cannot be transferred to the wallet will be impacted by the new restrictions.
Yoni Assia, eToro’s Co-founder and CEO, expressed optimism about the settlement. “This settlement allows us to move forward and focus on providing innovative and relevant products across our diversified U.S. business,” Assia told CoinDesk. Despite the settlement, eToro did not admit or deny the charges but chose to resolve the matter to avoid prolonged litigation.
The SEC’s action against eToro is part of a broader crackdown on crypto firms. The regulator has been aggressive in its enforcement, recently securing a partial victory in its protracted case against Ripple. Ripple was ordered to pay $125 million for violating securities laws, a significantly reduced amount from the $2 billion initially sought. The SEC has also taken action against other major players in the crypto space, including Coinbase and Binance, further underscoring its intensified scrutiny of digital assets.
The eToro case is particularly intriguing as it does not specify which tokens were considered securities. This ambiguity highlights the ongoing debate over the regulatory treatment of crypto assets. The SEC has yet to establish a formal definition of what constitutes a security in the crypto realm, leaving many firms and investors in legal uncertainty.
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In light of these developments, eToro’s Assia expressed hope for a clearer regulatory framework in the U.S., similar to those already established in the U.K. and Europe. “Once this is in place, we will look to enable trading in the crypto assets that meet this framework,” Assia said.
As the regulatory landscape for cryptocurrencies continues to evolve, eToro’s settlement underscores the growing pressure on crypto platforms to align with U.S. securities laws while navigating the complex and often ambiguous regulatory environment.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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