eToro, a prominent online trading platform, has reached a settlement with the U.S. Securities and Exchange Commission (SEC) and agreed to stop trading nearly all crypto assets for U.S. customers, according to the latest Launches From the Securities and Exchange Commission.
The SEC has accused eToro of operating as an unregistered broker-dealer and clearing agency to facilitate the trading of crypto assets that are considered securities.
As part of the settlement, eToro agreed to pay a $1.5 million fine and will limit its U.S. trading services to a limited number of cryptocurrencies.
SEC Application and eToro Response
An investigation by the U.S. Securities and Exchange Commission has found that since 2020, eToro has allowed U.S. customers to trade crypto assets on its platform without complying with federal securities laws.
The regulator has determined that eToro’s services fall within the scope of the Brokerage Firms and Clearing Agencies Regulations because some of the crypto assets offered on the platform are considered securities.
In response, eToro agreed to remove most crypto assets from its platform and offer only limited options to US traders in the future.
It is worth noting that the SEC’s order comes as part of its broader efforts to regulate the digital currency industry and ensure that trading platforms comply with existing laws governing securities.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said eToro’s decision to remove tokens offered as investment contracts from its platform demonstrates its willingness to comply with the applicable regulatory framework. Grewal added:
Not only does this decision enhance investor protection, it also provides a path forward for other crypto brokers. The $1.5 million penalty reflects eToro’s agreement to stop violating applicable federal securities laws while continuing its operations in the United States.
Additionally, as part of the settlement, eToro will allow its U.S. clients to sell their remaining crypto assets within 180 days. After this period, eToro will liquidate any crypto assets that are considered securities that were not sold, and the proceeds will be returned to clients.
According to the statement, eToro’s acceptance of the cease and desist order and the imposed penalty was without admitting or denying the SEC’s findings.
The Future of eToro and Crypto Asset Trading
Going forward, eToro in the US will only offer trading in three major cryptocurrencies – Bitcoin, Bitcoin Cash, and Ethereum. This represents a major shift in the platform’s offerings as it seeks to operate within SEC guidelines.
The removal of other tokens could impact the company’s user base in the United States, where eToro was previously known for providing access to a wide range of digital assets.
The statement revealed that the SEC’s investigation into the eToro case was conducted by the SEC’s Crypto and Cyber Assets Unit. The case involved key officials and other members of the SEC’s enforcement team.
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