eToro enters the U.S. crypto market during the second half of 2018 riding a strong year. The brokerage, which brings over 10 million users across more than 140 countries, is launching a new wallet and
eToro enters the U.S. crypto market during the second half of 2018 riding a strong year. The brokerage, which brings over 10 million users across more than 140 countries, is launching a new wallet and its own exchange. Yoni Assia, co-founder and CEO, announced the exchange while speaking at Consensus in New York. "We are building the exchange in order to support hundreds of tokens," Assia said. The exchange will begin as a crypto-to-crypto platform before eventually supporting fiat trades.
The wallet removes a friction point that has frustrated users. When they buy Bitcoin on eToro, they own it. But the platform keeps their coins in its custody. They cannot send Bitcoin elsewhere. "This will enable people to buy cryptos directly, and send and receive Bitcoin, Ethereum, Litecoin, Bitcoin Cash, etc.," Assia said. "When a customer today buys Bitcoin at eToro they already buy the Bitcoin, but until today we didn't enable our customers to actually send and receive Bitcoin."
This push comes after eToro secured $100 million during a March venture round led by China Minsheng Financial. The company has expanded its cryptocurrency roster in recent months, adding Stellar, NEO, and EOS to existing support for Bitcoin, Ethereum, Bitcoin Cash, XRP, Litecoin, Ethereum Classic, and Dash. The count now reaches 10 supported tokens, with more on the horizon.
Before adding any asset, eToro puts it through a rigorous vetting process. The company requires at least $1 billion in market cap and daily trading volumes topping $50 million. It also performs security audits and background research on the teams behind the projects. "We study every crypto before it's added on eToro to enable us to have that level of research that Mati [eToro's senior market analyst] does on every one of the cryptos," Assia said. "It doesn't mean every crypto on eToro means you should buy because it depends on the price, but it means that we've done sufficient analysis to say that if the price is right you should buy it."
The U.S. expansion brings eToro's customer base to new territory. The company operates in the U.K., Germany, Switzerland, Spain, Australia, and elsewhere. American users will gain access to all 10 cryptocurrencies on the platform, plus social trading tools that let them follow and replicate the positions of other traders in their community feed.
Regulatory hurdles could have derailed the U.S. entry, but eToro has advantages. The company operates under the oversight of the U.K.'s Financial Conduct Authority and Cyprus' Securities and Exchange Commission, giving it a decade of experience working with financial regulators. Assia credited those relationships in smoothing the path forward. "We already have a significant business in cryptocurrency and we have rigid processes around custody of customer assets," he said. "We have been able to share that with the different regulators and explain to them what we do. We expect this to be a constant discussion around the right path of regulations for cryptos."
On assets, Assia sees Bitcoin and Ethereum as the core holdings. Bitcoin functions as digital money in his view, while Ethereum created a new market through initial coin offerings. That market presents real challenges. Regulatory uncertainty and fraud schemes cast shadows over ICOs. Yet roughly 1,000 projects have conducted ICOs and developed applications on Ethereum, and Assia believes many are worth watching. The ecosystem exhibits growing maturity, he said. He also sees potential in NEO, Ripple, and Stellar.
Assia remains bullish despite the Consensus conference failing to ignite a rally many hoped for. "Is there a bubble in prices?, asked Assia. Maybe yes, maybe no, but I think longer term I'm quite certain that we are going to see prices higher than this."
