eToro to Halt Most Cryptocurrency Trading in US Following SEC Settlement

eToro, a popular retail trading platform, has agreed to cease offering most cryptocurrencies to its U.S. customers as part of a settlement with the U.S. Securities and Exchange Commission (SEC). This agreement underscores the SEC’s ongoing efforts to regulate the cryptocurrency industry and its insistence that many crypto tokens qualify as securities and must comply with federal securities laws.

As part of the settlement, eToro will pay a $1.5 million penalty. The SEC alleged that the platform had been providing U.S. customers access to crypto assets that the regulator deemed to be securities since at least 2020 without adhering to the necessary registration requirements.

While neither admitting nor denying the SEC’s findings, eToro agreed to restrict its U.S. cryptocurrency offerings to only Bitcoin, Bitcoin Cash, and Ether going forward. The company will allow its customers a 180-day period to sell their holdings of other crypto tokens.

“By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. He added that the resolution “offers a pathway for other crypto intermediaries” seeking to comply with regulations.

This settlement marks another victory for the SEC in its ongoing efforts to assert its authority over the cryptocurrency industry. The regulator has maintained that most cryptocurrencies qualify as securities and must comply with registration requirements, a stance challenged by many within the crypto industry who accuse the SEC of overreach.

The SEC is currently engaged in legal battles with several major crypto platforms, including Coinbase, Binance, and Kraken, all of which argue that crypto assets do not meet the traditional definition of securities.

eToro, which is considering an initial public offering (IPO) in New York or London, likely views this settlement as a necessary step to clear regulatory hurdles and pave the way for its potential IPO.

Key Takeaways:

• eToro will stop offering most cryptocurrencies to its U.S. users as part of an SEC settlement.
• The company will pay a $1.5 million penalty and restrict its offerings to Bitcoin, Bitcoin Cash, and Ether.
• The SEC alleges that eToro violated federal securities laws by offering unregistered crypto assets.
• This settlement highlights the SEC’s ongoing efforts to regulate the cryptocurrency industry.

This case underscores the SEC’s determination to enforce its interpretation of securities laws within the cryptocurrency market. The outcome of the ongoing legal battles between the SEC and major crypto platforms will have significant implications for the future of the industry and the regulatory landscape governing digital assets.