As a researcher with years of experience in the cryptocurrency market, I must say that the latest development between eToro and the U.S. Securities and Exchange Commission (SEC) is an interesting turn of events. While it’s always a bit disheartening to see a popular platform like eToro facing regulatory action, it’s encouraging to see companies taking steps towards compliance in the face of increasing scrutiny from regulatory bodies.
Etoro agreed to pay a penalty of $1.5 million to the United States Securities and Exchange Commission, following accusations that they had broken federal securities regulations.
As per a disclosed agreement with the SEC, eToro has agreed to halt almost all cryptocurrency trading and transactions for its U.S. customers moving forward. From now on, American users can only trade in Bitcoin (BTC), Bitcoin Cash (BCH), and Ethereum (ETH) on the platform.
According to the directive given on September 12th, this trading platform has 187 days to remove all other cryptocurrencies and sell any current assets they hold. After this process is complete, customers will be compensated with an amount equivalent to their account balance.
According to the SEC’s lawsuit, eToro functioned as an unregistered broker and clearing house since around 2020. Despite reaching an agreement with the SEC, eToro refused to acknowledge or dispute the SEC’s accusations. Gurbir S. Grewal, head of the SEC’s enforcement division, stated that eToro’s cooperation could serve as a roadmap for other cryptocurrency intermediaries to adhere to U.S. regulations.
To ensure they operate legally, eToro decided to eliminate investment contract tokens from their platform, aligning with existing regulations. A fine of $1.5 million was imposed as a part of this agreement, indicating that eToro would stop breaking federal securities laws in the U.S., continuing its operations there.
Gurbi S. Grewal, director of the SEC’s enforcement division
Although the platform avoided discussing the current security classification of cryptocurrencies, this settlement could serve as a guide for similar situations in the future. Distinguishing Bitcoin, Bitcoin Cash, and Ethereum from other cryptocurrencies implies that the Securities and Exchange Commission considers most, if not all, other digital assets to be classified as securities.
From my perspective as an analyst, it’s clear that eToro’s past actions have bolstered the belief among some service providers about their stance. For instance, when the SEC sued Ripple in 2020, eToro chose to delist XRP and three other cryptocurrencies as a precautionary measure. However, it continued offering crypto services in other markets. Interestingly, they were granted a CySEC CASP approval, allowing them to extend digital asset facilities across all European Union countries.
Simultaneously, the SEC and other American regulatory bodies have been intensifying their scrutiny over the expanding blockchain industry. Since 2013, the SEC has imposed fines totaling over $7.4 billion on cryptocurrency-related entities.
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2024-09-12 16:50