- EToro has settled with the SEC and can only list BTC, BCH, and ETH in the U.S., potentially indicating which digital assets the SEC does not consider securities
- The settlement raises questions about whether the SEC’s decision provides clues on which cryptocurrencies it views as securities versus non-securities
- Industry lawyers react and weigh in on the implications of the settlement for crypto regulation and the SEC’s stance on digital assets
EToro, a major cryptocurrency exchange platform, has recently settled with the Securities and Exchange Commission (SEC). Under the agreement, eToro’s U.S. subsidiary, eToro USA Securities Inc., will pay $1.5 million for offering security trading services without proper registration. The settlement also restricts eToro USA from listing any crypto assets other than Bitcoin, Bitcoin Cash, and Ether in the U.S. This has sparked discussion within the crypto industry about which digital assets the SEC deems to be securities.
Details of the SEC Settlement
The SEC began investigating eToro in 2020 for allowing U.S. customers to buy, sell, and trade crypto assets through its platform between 2018 and 2021. According to the SEC, eToro should have registered as a national securities exchange during this period. By failing to do so, the SEC alleges that eToro violated federal securities laws.
Under the terms of the settlement, eToro USA will pay a $1.5 million penalty to the SEC. The company will also cease operations in the U.S. for at least two years. After that time, eToro USA will only be allowed to offer trading services for Bitcoin (BTC), Bitcoin Cash (BCH), and Ether (ETH). No other crypto assets are permitted under the agreement.
The settlement marks one of the largest penalties imposed by the SEC against a crypto trading platform to date.
Industry Reaction
The settlement has sparked debate within crypto legal circles about which digital assets the SEC deems to be securities.
By only allowing eToro USA to offer trading in BTC, BCH, and ETH, some lawyers believe the SEC views these assets as commodities rather than securities. Other crypto assets, in the SEC’s view, may still be considered securities and require registration.
“By carving out only three assets, the SEC is implicitly saying that those three have been determined not to be securities,” said one securities lawyer.
However, others argue that no definitive conclusions can be drawn from the settlement terms. The permissions granted to eToro USA do not necessarily reflect the SEC’s final determinations on the regulatory status of various crypto assets.
“This carve out should not be interpreted as a determination that the three approved cryptocurrencies are not securities,” said another industry lawyer. “It simply suggests the SEC is comfortable that, at this time, those three don’t need to be registered.”
The settlement leaves many open questions about the SEC’s views on crypto asset regulation. For now, the industry will be watching closely to see if any clearer guidance is provided. The debate around crypto’s regulatory status continues.
Conclusion
The eToro SEC settlement provides a glimpse into the commission’s evolving stance on crypto asset regulation. By restricting eToro USA’s offerings to just three digital assets, the SEC appears to be signaling that these assets, at minimum, can be safely traded without registration as securities. However, there is still much uncertainty around the regulatory treatment of other crypto assets. The settlement is just one step in the ongoing journey of crypto policy development.
