EToro to cease all crypto trading except BTC, BCH, ETH

eToro has reached a $1.5 million settlement with the U.S. Securities and Exchange Commission over alleged violations of federal securities laws.

In a settlement announced by the SEC, eToro also agreed to halt nearly all cryptocurrency trading and operations for US clients. Going forward, American users will only be able to trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH) on the platform.

Following the order placed on September 12, the trading venue has 187 days to withdraw all other cryptocurrencies from the market and liquidate existing assets. Clients will receive income equal to their balance.

The SEC’s complaint alleged that eToro has been operating an unlicensed brokerage and clearing agent since at least 2020. The exchange has reached a settlement with the SEC, but has refused to admit or deny the SEC’s allegations. Gurbir S. Grewal, director of the SEC’s enforcement division, said eToro’s cooperation provides a path for other crypto brokers to comply with U.S. rules.

eToro has chosen to be compliant and operate within our established regulatory framework by removing tokens offered as investment contracts from its platform… The $1.5 million penalty reflects eToro’s agreement to cease violating applicable federal securities laws while continuing its U.S. operations.

Gurbi S. Grewal, director of the SEC’s enforcement division

While the platform avoided discussing the security status of the cryptocurrencies, the settlement could serve as a precedent in future lawsuits. Separating BTC, BCH, and ETH from other cryptocurrencies suggests that the SEC views most, if not all, other digital assets as securities.

Past decisions by eToro reinforce this view among some service providers. When the SEC filed a lawsuit against Ripple in 2020, eToro responded by delisting (XRP) and three other cryptocurrencies. The company’s crypto services have continued in other markets, though. As reported, the firm has received CySEC CASP approval to offer digital asset facilities in all EU countries.

Meanwhile, the SEC and other U.S. regulatory watchdogs have continued a sweeping crackdown on the growing blockchain sector, with SEC fines for crypto assets exceeding $7.4 billion since 2013.