Following a settlement with the U.S. Securities and Exchange Commission (SEC), eToro has agreed to cease most cryptocurrency offerings to its U.S. clients.
The SEC had accused eToro of granting access to crypto assets classified as securities without meeting federal securities registration requirements since 2020.
As per the agreement, eToro will pay a penalty of $1.5 million for operating as an unregistered broker and clearing agency in association with its crypto services.
Professional Insights
Yoni Assia, the co-founder and CEO of eToro, shared his views on the settlement, stating that it allows the company to concentrate on delivering innovative products across its diversified U.S. operations. Assia emphasized the importance of compliance and working closely with regulators worldwide.
Other than Assia, industry experts like Lowell Ness from Perkins Coie also commented on the settlement.
Ness highlighted the substantial gap emerging between regulators and certain early court decisions, showcasing interest towards parties agreeing to such significant settlements.
What Does it Mean?
As part of the settlement, eToro will restrict its U.S. clientele to trade solely in Bitcoin [BTC], Bitcoin Cash [BCH], and Ethereum [ETH] on its platform.
Users will have a 180-day timeframe to sell any other cryptocurrencies they hold, after which these assets will no longer be tradable on the platform.
This move by eToro signifies a notable adjustment in its crypto offerings in response to regulatory obstacles, although it has been met with criticism, with many perceiving it as regulatory overstepping by the SEC.
Discussing the matter, Drew Hinkes, Partner at K&L Gates, observed the situation with eToro, acknowledging that it is not an isolated case, as various other major crypto platforms have faced legal confrontations with the SEC.
Revelation of SEC Fines
A recent report disclosed that the SEC has imposed substantial penalties on major crypto firms from 2013 to 2024, highlighting key cases and the types of regulatory violations committed.
According to the report, the SEC has imposed fines exceeding $7.42 billion on crypto firms and individuals since 2013, with $4.68 billion of this amount imposed in 2024 alone.
Since 2022, the SEC has intensified its efforts to oversee the cryptocurrency sphere, penalizing firms and ensuring executives are held accountable, thereby emphasizing stricter regulatory scrutiny.