In a landmark settlement with the Securities and Exchange Commission (SEC), online trading platform eToro has agreed to halt most of its cryptocurrency trading services in the United States. The settlement comes after eToro was charged with operating as an unregistered broker in connection with its crypto offerings. As part of the deal, eToro will pay $1.5 million to settle the charges, though it neither admits nor denies the SEC’s findings.
Crypto Offerings Cut Amid Regulatory Scrutiny
The SEC’s investigation revealed that eToro had been providing U.S. customers with the ability to trade crypto assets classified as securities without adhering to the necessary registration requirements. This violation, which has been ongoing since at least 2020, led to the agency’s crackdown on the platform.
According to the SEC, eToro’s operations involved acting as both a broker and a clearing agency, offering its customers the chance to trade crypto assets deemed securities. In light of these charges, the company will cease offering most of its crypto trading services in the U.S.
U.S. users of eToro will now be limited to trading just three cryptocurrencies: Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH). Any other crypto holdings will be liquidated by mid-March 2024, with the proceeds being transferred to users’ cash balances in their investment accounts, as announced by eToro earlier this week.
SEC’s Warning to Crypto Platforms
This settlement is part of a broader effort by the SEC to enforce regulatory compliance within the crypto industry. Gurbir Grewal, Director of the SEC’s Division of Enforcement, emphasized the importance of eToro’s decision to remove certain tokens from its platform.
“By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework. This resolution not only enhances investor protection but also offers a pathway for other crypto intermediaries,” Grewal said in a statement.
The SEC’s action against eToro highlights the agency’s ongoing scrutiny of cryptocurrency platforms, pushing them to align with federal securities laws. This follows a series of similar actions, including a Wells notice issued to Robinhood earlier this year, although formal legal action has yet to be taken in that case.
What This Means for U.S. Crypto Traders
For U.S. users of eToro, the settlement brings about significant changes. With a much more limited selection of crypto assets available for trading, the platform’s offerings have effectively narrowed to only Bitcoin, Bitcoin Cash, and Ethereum. This may force some users to explore other platforms or investment options.
As the regulatory environment around cryptocurrency continues to tighten, platforms like eToro are being forced to adapt to maintain their U.S. operations. The SEC’s stance makes it clear that compliance with federal securities laws is non-negotiable, and platforms that fail to register properly as brokers or clear agencies could face similar repercussions.
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The eToro settlement could signal the beginning of a wider regulatory crackdown on other crypto platforms offering unregistered securities. As the SEC continues to tighten its grip on the crypto industry, U.S. investors may see more platforms adjusting their services or limiting access to certain assets to avoid legal complications.
This settlement marks a crucial moment in the evolving relationship between regulators and the cryptocurrency market, and it sends a clear message: platforms must comply with federal laws or risk facing substantial penalties.
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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