eToro started out as a social trading exchange platform for forex (foreign exchange) trading. Founded in Israel in 2007 by brothers Yoni and Ronen Assia along with David Ring. In 2013, eToro added stock and contracts for difference (CFDs) investing but it wasn’t until 2018 that eToro opened its user base to Americans, but only for cryptocurrency trading on its beta version. At the time, it was already offering stocks, forex and limited crypto trading to over 140 other countries.
While US users may trade cryptocurrencies, they miss out on the stocks, CFDs and margin trading that international users enjoy. eToro is registered in all states but Hawaii, with most states already able to trade and a few (i.e. New York and Nevada) in the process of enabling trades.
eToro has been known for being a modern day digital brokerage that brings together experienced traders who can earn by having novices copy their trades.
eToro is a registered company based in Cyprus and is regulated through the Financial Conduct Authority in the UK.
As a trading exchange, eToro has an extremely simple interface with basic charting for each coin or stock and limited functionalities. Their crypto trading fees are high in relation to other US exchanges like Gemini and Binance.us, especially in relation to their minimal trading interface. However, copy trading is what sets them apart from other brokerages and exchanges.
The democratization of stocks began about a decade ago and eToro’s has been there every step of the way with their unique copy trading feature. It provides a way for the newcomer to begin trading immediately, hedging the risk of not having experience or knowledge by copying professional traders.
Copy trading in the crypto realm is quite different, as largely unregulated digital currencies are in play. Additionally, since cryptocurrency trading is much newer to financial markets compared to stock trading and these types of assets are often much more volatile than foreign currencies or stocks, “professional” crypto traders may be a little harder to distinguish.
The trading exchange is very simple and easy to navigate with relatively few features or bells and whistles.
All users, regardless of whether they are copy trading others, can view each trader’s performance statistics on the platform (unless a trader sets their profile to private), adding a crowdsourcing feature to trading.
US users only have access to market orders with no leverage.
Non-US retail users (Europe, UK) may leverage up to 5x on stock trades while professional clients of eToro in Australia can leverage up to 10x on stock trades and up to 20x on selected stocks. Positions that are traded with leverage are traded as CFDs; you are holding a position without ownership of the stock and without any shareholder rights.
The minimum copy trading amount is $200 per trade, which users can apply to the professional traders they wish to follow. Maximum amount is $500,000 and users can choose to follow up to 100 traders at once. The copy trading mechanism for non-US users is well developed while US residents have very limited copy trading choices at the time of writing.
There are relatively few crypto ‘experts’ to choose from in comparison to the stock traders available for copying. For stocks (not available in the US), many of the traders have been building a reputation for years on eToro. Users may access the traders’ returns stats, portfolio allocation, risk score, and an estimate of how much they’d earn over a year if you were copying this particular trader.
To help attract experienced traders, eToro has created their Popular Investor Program; see below for the parameters for joining:
To attract newcomers to the space who want to copy the traders of others (and provide a market for professional traders), eToro offers a free demo account for new traders to get the hang of trading with zero risk. It’s available for both stock and crypto trading.
All CopyPortfolios are overseen by eToro’s investment team and can also be copied by traders to help minimize long-term risk and gain opportunities for portfolio growth. Each portfolio uses a different methodology and is rebalanced regularly. There are two options:
For those traders who are interested in learning more about copy trading, or “social trading” as it’s sometimes called, there’s a video series available by Social Trading Vlog, which focuses solely on copy trading at eToro.
In the watchlists area, you can select assets you are considering making trades on and set a price alert. For instance, if you want to place a market buy for Ethereum when it hits $1300, you can easily set that up.
By clicking on the charts next to the real time prices, traders are led to eToro’s ProCharts, which enable customization for:
Compared with many crypto exchanges, such as Kraken and Gemini, eToro’s educational resources are slim. When signed on as a US user there are virtually no informational resources in the dashboard. The focus is more on providing trader statistics which are available to all users (unless a trader sets their profile to private).
The main website has an Education Page that covers general topics such as “What is Cryptocurrency” and “How to Buy Bitcoin” and leads you to video and text tutorials on trading topics. You must subscribe to receive the tutorials which come in segments, which is suboptimal to those who want to take in the information at their own pace. Additionally, there is zero information about using, storing, and securing cryptocurrencies. Users must be logged off of eToro to access the minimal educational resources located on the website.
US users will need to complete a W9 to submit their Tax I.D. information for eToro’s reporting requirements. They deliver 1099-K tax forms when a user meets both of the following conditions:
Different states in the US have different reporting requirements.
When eToro first opened to crypto trading, they instituted a $5.00 withdrawal fee for crypto assets, which was later cancelled for US residents (but still holds for non-US users).
As eToro is compliant with AML and KYC, all users must go through a complete verification process. There are no options for limited trading with lower verification levels as you see on exchanges like Binance and Gemini. To verify, you’ll need to provide your email, address, DOB, social security number, proof of identity, and proof of address. The process takes several days and users will receive a notification letting them know when verification is complete.
What are AML and KYC?
As part of a range of Anti Money Laundering regulations mandated nationally and internationally, KYC involves the requirement of companies to verify each customer’s identity during the onboarding process. Verification is achieved by submitted identification, proof of ownership, and personal information such as name, address, email address, phone number and tax I.D. number.
EtoroX services high networth individuals, hedge funds, brokers, day traders, algorithmic traders, and family offices wanting to migrate their professional trading into crypto markets. This advanced version of eToro features:
The eToroX platform offers familiar features that you’d see in stock trading, such as transaction fees in basis points and open/high/low/close data (which is interesting considering cryptos run in 24/7 markets). Something that is unique to this platform (in the crypto world) is the use of an inverted maker/taker fee structure. It’s a taker/maker structure so the takers get the lower fees, which is opposite of crypto exchanges.
EToroX provides near instant bank transfers using Signet and sets a daily limit of $10,000 in withdrawals, unless otherwise requested and approved. There are no fees for deposits but the minimum deposit is $10,000 (it’s $50 on regular eToro and other US exchanges).
The site is easy to use and combines the functionalities eToro has been building on for over almost a decade. Its unique copy trading features become a focal point on this exchange and provide a dynamic, crowd sourced cache of trade information in its trader statistics. Navigation is intuitive but for the newer crypto traders there should be more information about digital assets within the user interface; as it is now there are none.
While phone support is only available in Australia, eToro does offer online chat through the customer service page, which also offers plentiful resources on how to use eToro. There’s also the option to put through a support ticket.
The negative reviews are largely centered on several topics:
Several “Club” levels are available to users with large portfolios. These users also enjoy enhanced customer service, a dedicated account manager, and advanced tools.
Detailed information on eToro’s crypto security procedures is only available for their institutional buyers (eToroX). Very basic security measures are listed for the general user:
eToro has a longstanding reputation as a brokerage that creates a market for new traders that feeds to experienced traders so they can earn by sharing their expertise. Their entrance into US availability and crypto markets is relatively new, in beta stage and lacking many of the features that US crypto exchanges like Coinbase, Kraken, and Gemini offer. The social trading element seems to be a viable business model, creating a way to bring in new traders and a vehicle for attracting top performing traders.
In July 2020, a pseudonymous hacker using the alias “Sheriff” was discovered to be auctioning off the data of 62,000 eToro users. Information at jeopardy including login credentials, phone numbers, postal addresses and balances. The starting auction bid price was $1500 with higher bids in $500 increments and the data going to the top bidder. A research company, Bank Security, posted an alert on the eToro Twitter account but eToro allegedly made no public response regarding the hack.
Newcomers will find an easy-to-use trading and copy trading platform that connects them to experienced, professional traders who can earn for sharing their knowledge. The crypto copy trading and trading features for US residents is in beta and offers limited services. Compared with other US crypto exchanges, eToro has a long way to go and sometimes appears to be stuck in the mode of traditional markets.
There’s also a stark difference between what’s available to US and non-US residents, demonstrating their need to catch up to crypto exchanges that have operated for much longer, but also suggests a noted slowness in rolling out crypto services, likely due to regulatory oversight of the mammoth forex exchange that’s been operating across the Pacific for many years.
Their free withdrawals to external crypto wallets is unusual and remains to be seen if they continue that. Other missing features, such as stablecoin trading, staking, and futures separate eToro from the competition, but their copy trading is a well developed product from their forex product and will likely help them gain an edge.