Trading platform eToro has agreed to a $1.5 million settlement with the U.S. Securities and Exchange Commission (SEC) to resolve allegations that it operated an unregistered broker, unregistered clearing agency, and facilitated trading of certain crypto assets deemed securities. The settlement, announced by the SEC on Thursday, requires eToro to cease violations of federal securities laws and restrict its crypto asset offerings to a limited selection.
According to the SEC’s statement, eToro will now only allow U.S. customers to trade Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH). eToro noted that these restrictions affect only about 3% of customer holdings by dollar value. An eToro spokesperson clarified that U.S. users would generally not need to take action, as only positions that cannot be transferred to the eToro crypto wallet are impacted. Positions in assets redeemable to the eToro wallet will remain unaffected.
Yoni Assia, eToro’s Co-founder and CEO, expressed that the settlement would enable the company to focus on offering innovative products in its diversified U.S. operations. “This settlement allows us to move forward and focus on providing innovative and relevant products across our diversified U.S. business,” Assia said.
The SEC’s order revealed that eToro had been facilitating the trading of crypto assets classified as securities since at least 2020, without adhering to the necessary registration requirements. eToro did not admit to or deny wrongdoing in agreeing to the settlement.
The case did not specify which tokens were considered securities, a notable omission in the SEC’s enforcement actions. The SEC has yet to provide a formal definition of which crypto assets fall under its jurisdiction, contributing to ongoing legal debates between regulators and the crypto industry.
The SEC’s recent actions against crypto firms include a partial victory in its prolonged case against Ripple, which resulted in a $125 million penalty for violating securities laws. The SEC also brought enforcement actions against Coinbase Inc. for intermediating transactions in crypto-asset securities and sued Binance, leading to significant leadership changes within the exchange.
The regulatory landscape for crypto assets remains contentious, particularly regarding the classification of Ether (ETH). While the Commodity Futures Trading Commission and much of the crypto industry consider ETH a commodity, the SEC has yet to take a definitive stance, although some SEC-registered brokers are treating it as a security.
Assia expressed hope for a clearer regulatory framework in the U.S., similar to those established in the U.K. and Europe. He indicated that once such a framework is in place, eToro aims to expand its crypto asset offerings in accordance with regulatory guidelines.
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