eToro US Halts Most Crypto Trading After SEC Settlement

The popular trading platform agrees to pay $1.5 million and limit crypto trading in the U.S. to Bitcoin, Bitcoin Cash, and Ether.

Stock and crypto trading platform eToro has announced major changes to its cryptocurrency services in the United States following a settlement with the U.S. Securities and Exchange Commission (SEC). As part of the agreement, eToro will scale back its crypto offerings, restricting trading to only three digital assets: Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH). The decision comes as a result of regulatory action taken by the SEC, which accused eToro of operating as an unregistered broker and clearing agency.

On September 12, 2024, the SEC disclosed the settlement, which includes a $1.5 million penalty. According to the regulatory body, eToro had been offering cryptocurrency trading services without proper registration, violating U.S. securities laws. As part of the settlement, eToro agreed to restrict its U.S. operations to the three aforementioned cryptocurrencies.

Additionally, U.S. customers will be given a 180-day window, starting from September 12, to sell off any other crypto assets they currently hold on the platform. This measure is intended to bring eToro’s operations in line with the SEC’s regulatory framework, ensuring that only approved assets are traded in compliance with U.S. laws.

The SEC’s enforcement action against eToro is part of a broader regulatory crackdown on cryptocurrency platforms in the U.S. In recent years, the agency has increased its scrutiny of companies that provide crypto trading, aiming to enforce securities laws and protect investors. The SEC has consistently argued that many digital assets fall under the definition of securities and, therefore, should be regulated accordingly.

Crypto platforms like eToro are being forced to navigate this evolving regulatory environment, which has resulted in significant changes to how these companies operate. Firms that fail to comply with the SEC’s requirements are increasingly subject to hefty fines, legal actions, and restrictions on the services they offer.

The legal challenges faced by eToro are not confined to the U.S. Earlier this year, the platform came under similar scrutiny in other regions. In April 2024, the **Philippines Securities and Exchange Commission** accused eToro of offering unregistered securities in the country. The Philippine authorities claimed that the platform’s crypto offerings were not compliant with local financial regulations, echoing concerns similar to those raised by the SEC.

These global regulatory hurdles highlight the increasing difficulties crypto platforms face as countries around the world look to tighten control over the rapidly expanding digital assets market. While the industry has grown significantly in recent years, the lack of a unified regulatory framework has led to a patchwork of laws and restrictions that companies must navigate.

For eToro, this latest SEC settlement means a drastic reduction in the crypto services it can provide to its U.S. customers. The limitation to Bitcoin, Bitcoin Cash, and Ether will likely impact many users who had been trading a broader range of cryptocurrencies on the platform. With the 180-day window to sell off other assets, some users may be forced to liquidate holdings earlier than planned, potentially incurring losses depending on market conditions.

This development also underscores the challenges that global trading platforms face in maintaining compliance across multiple jurisdictions. As regulators increase their oversight of digital assets, platforms like eToro must adapt quickly or face penalties that can significantly impact their business operations.

The eToro case is just one example of the broader regulatory push targeting cryptocurrency platforms in the United States. The SEC and other regulators are working to impose clearer rules and guidelines for digital assets, with the goal of protecting investors while maintaining market integrity. However, the lack of clarity in certain areas of crypto regulation continues to be a challenge for companies operating in this space.

As regulatory bodies like the SEC take a firmer stance, crypto trading platforms are likely to face increasing scrutiny and may need to modify their services to remain compliant. This could result in further limitations on the types of cryptocurrencies available for trading and additional restrictions on how users can interact with digital assets.

In the case of eToro, the settlement serves as a reminder that operating in the crypto space requires careful attention to regulatory compliance. While the platform will continue to offer trading for Bitcoin, Bitcoin Cash, and Ether, the future of more diverse crypto trading options in the U.S. remains uncertain.

eToro’s settlement with the SEC marks another chapter in the ongoing regulatory challenges faced by cryptocurrency platforms in the U.S. As part of the agreement, eToro will pay a $1.5 million fine and limit crypto trading to just three major digital assets. This decision reflects the broader push by regulators to ensure that crypto trading platforms operate within the bounds of U.S. securities laws.

For eToro and its users, the restrictions signal a significant shift in how the platform operates in the U.S. market, while also illustrating the growing complexity of the regulatory landscape for digital assets. As the industry continues to evolve, platforms like eToro will need to balance innovation with compliance to thrive in this new era of crypto regulation.

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