Is eToro Safe? Licensing, Regulation & Security Reviewed

In this review, we will take a deep look at eToro brokerage and answer the question: is eToro safe platform to trade with?

eToro is one of the most popular crypto trading platforms. Started in 2007 as a forex trading platform, the online brokerage has since extended support to investments like stocks and ETFs. It also exposes you to derivatives like CFDs and some of the best cryptocurrencies.

By leveraging its solid reputation of security, reliability, and accessibility, eToro has attracted more than 30 million users to the platform, and at one time, the assets under management on the platform exceeded $9 Billion.

But is eToro safe? We will be answering this question and helping you understand if eToro is the best crypto exchange for you in this post.

Is eToro Safe? Our Verdict

eToro is arguably one of the most recognizable multi-asset online trading platforms. It has been around for more than a decade.

Throughout this period, it has extended its coverage to 140+ countries across North America, Asia, Africa, South America, Europe, and the Middle East. Here, it has welcomed more than 32 million individuals who trade and invest in the 5000+ financial instruments supported on the platform.

It is our honest view that eToro is a safe crypto exchange because it is licensed and regulated by multiple countries across the world. These include the Financial Crimes and Enforcement Network (FinCEN) and the Financial Industry Regulatory Authority (FINRA) in the USA, as well as the Australian Securities and Investments Commission (ASIC) in Australia.

eToro is also licensed by the Financial Conduct Authority (FCA) in the UK. In Europe, eToro operates under a license issued by the Cyprus Securities and Exchange Commission (CySEC), Malta Financial Services Authority (MFSA), De Nederlandsche Bank NV (DNB) in the Netherlands, the Autorite des Marches Financiers (AMF) in France, and Organismo Agenti e Mediatori (OAM) in Italy.

eToro is also safe because it has never been hacked or suffered a serious security breach that resulted in the significant loss of client assets or data. Further, the brokerage doesn’t share sensitive client information with third parties.

Our analysts are confident that these are sufficient proof that eToro is one of the safest online trading platforms.

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

eToro Regulation

eToro was founded in Israel in 2007. More than a decade later, the company has extended its reach to 140+ countries and set up several subsidiaries that it uses to extend trading services in these jurisdictions. Below, we look at some of the jurisdictions where eToro is licensed to operate and tell you about the subsidiaries facilitating trades here.

USA

In the US, the online broker operates under the name eToro USA LLC, a subsidiary registered as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN). It has also been issued with a Money Transmitter License in multiple states and operates under registration number FinCEN # 31000204884179.

It also operates under the name eToro USA Securities Inc., a broker-dealer that’s licensed and regulated by the Securities and Exchange Commission (SEC #8-70212/SEC CIK #0001753042). The broker-dealer is also a member of the Financial Industry Regulatory Authority (FINRA /CRD #298361). Both subsidiaries have a registered office at 221 River St., 9th Floor, Hoboken, NJ 07030.

UK

eToro (UK) Ltd’s operations in England are authorized and regulated by the Financial Conduct Authority (FCA). The company is authorized to offer cryptocurrency services and issued with the Firm Reference Number 583263.

The registered office of eToro (UK) Ltd is on the 24th floor, One Canada Square, Canary Wharf, London E14 5AB.

eToro Money UK Ltd is also authorized and regulated by the FCA to offer electronic money and payment services in England and Wales. This has its registered company number as 07712717 and registered offices at Maclaren 3b – Lancastrian Office Centre Talbot Road, Stretford, Manchester, M32 0FP, England.

Cyprus

In most European countries, eToro operates under the authority and regulation of the Cyprus Securities and Exchange Commission (CySEC). eToro (Europe) Ltd is regulated in Cyprus under company number HE 200585 with registered offices at 4 Profiti Ilia Str., Kanika Business Centre, 7th floor, Germasogeia, 4046, Limassol, Cyprus.

Australia

eToro AUS Capital Limited, also known as eToro Australia, is authorized to offer financial services and products in Australia by the Australian Securities & Investment Commission (ASIC). It operates under license number 491139 and has its registered office at Level 3, 60 Castlereagh Street, Sydney NSW 2000, Australia.

eToro Australia also promotes eToro Asset Management Limited – also known as eToro AM – which is licensed to operate as a Responsible Entity under Chapter 5 of the Corporation Act 2001. eToro AM runs a registered scheme known as eToro service ARSN 637 489 466. For the execution of trades, however, eToro AM uses such executing brokers like eToro Europe or similar third parties.

Malta

eToro Money Malta Ltd is authorized to provide electronic money and financial services in Malta by the Malta Financial Services Authority (MFSA). It operates under the company No. C97952 and has its registered office at 52 St. Christopher Street, 1462, Valeta.

eToro User Protection & Compensation

eToro is safe not just because it has never suffered a major security breach or had its systems hacked. It is also safe because it has put in place adequate safeguards to protect and compensate its clients in the event of a hack.

Below, we look at protection and compensation measures adopted in different jurisdictions.

USA

In the USA, eToro platform users are protected by three different insurance covers. First is the mandatory Federal Deposit Insurance Corporation (FDIC) cover, which insures client cash deposits of up to $250,000.

Your stock investments are also insured with the Securities Investor Protection Corporation (SIPC) for up to $500,000.

Your stock and ETF investments are further insured with Apex Clearing Corporation. This cover protects you against total losses of up to $150 Million, $37.5 Million for securities, and up to $900,000 for cash.

UK

eToro UK also carries two insurance policies covering your cash deposits and investments in stocks, ETFs, and non-leverage CFDs. First is the mandatory £85,000 cover with the Financial Services Compensation Scheme (FSCS).

Secondly, eToro operates a separate insurance cover carried by the Lloyds Bank of London. This protects your cash deposits as well as CFD and securities investment by up to £1 Million should the broker-dealer become insolvent.

Europe

In Europe, eToro runs two policy covers for all its clients. First is the Investor Compensation Fund (ICF) of up to €20,000, mandated by CySEC and covering cash deposits, CFDs, and securities. eToro Europe clients are also covered by the €1 Million policy carried by the Lloyds Bank of London.

Australia

In Australia., only cash deposits are covered by the ASIC-mandated insurance policy of up to $250,000 AUD. The insurance policy is carried out by the Australian Financial Claims Scheme (AFCS).

eToro, nevertheless, extends the $1 Million AUD cover by Lloyds Bank of London to all its Australian clients, covering cash, securities, and CFDs.

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

How eToro Protects Your Account

In addition to insuring your deposits, eToro has put in place several other measures aimed at protecting your funds and data. Below, we look at some of the strategies put in place by eToro to keep your assets safe.

Data encryption

eToro has deployed multiple safeguards around the personal information it collects from its platform users. It, for starters, doesn’t share this information with third parties.

Further, the online crypto trading platform encrypts this data heavily before hiding it behind strong firewalls.

We must also add that your communication and interactions with eToro systems are also subjected to end-to-end encryption.

Two-Factor Authentication

eToro has availed two-factor authentication for all clients. When turned on, a one-time security passcode (OTP) will be sent to you via SMS every time you try to log in to the trader account.

Cold storage

When you buy the best altcoins on eToro, the brokerage provides you with a free exchange-based wallet. This stores more than 90% of client assets in an ultra-secure offline vault.

Segregated bank account

eToro, like most regulated online trading platforms, is required to hold client funds in a segregated and regularly audited bank account. This goes a long way in preventing possible misuse or misappropriation of client funds.

Secure systems

eToro has also fortified its systems and is constantly updating its networks to keep up with the rapidly changing technologies. It, for instance, provides regular updates to the eToro trading app and the eToro Money mobile wallet app.

These updates aren’t designed to only deploy new tools and features to the app. They are also used to deliver patches to possible security vulnerabilities. Not forgetting that the eToro website is SSL-certified.

Is the eToro Crypto Wallet Secure?

When you buy Bitcoin, Ethereum, Dogecoin, and some of the best cryptocurrencies on eToro, the crypto exchange will provide you with one of the best crypto apps for iOS and Android – eToro Money wallet.

This free mobile wallet app for Bitcoin is optimized for iOS and Android. Unlike the exchange-based cold wallet, the wallet app is non-custodial, giving you unrestricted access and absolute control over the private keys of your digital currencies.

Like the eToro app and web trading platforms, the eToro Money wallet is secure. The following measures have been put in place to keep it and your assets secure:

Strong password and recovery seed

When setting up the eToro Money wallet, you will be required to create a strong password for your account (typically the same used to create the eToro trader account). You will also be provided with a 24-word seed phrase that you can use to either recover a lost wallet or move the app and your funds to another mobile device.

Two-factor authentication

In addition to the ultra-secure password, eToro makes it possible for users to activate two-factor authentication for the crypto wallet. This goes a long way in preventing unauthorized access to your wallet and the transfer of digital assets.

Encryption

The data held in the eToro Money wallet is encrypted heavily before being deposited into the root storage of your phone. This makes it almost impossible, even for individuals with access to your phone, to transfer your digital assets.

eToro Money Wallet Availability

The eToro Money Wallet app is available in 100+ countries and territories across the world. Like the eToro trading app, the eToro mobile wallet is also free. But unlike most crypto trading wallets – like eToro that only gives you access to 70+ cryptocurrencies –  the eToro wallet app supports 120+ cryptos and 1500+ tokens.

Are Payments on eToro Secure?

Yes, eToro has taken solid steps to guarantee the security of payments on the platform. It, for instance, uses the renowned Transport Layer Security encryption protocol in processing online payments. Plus, it is compliant with the Payment Card Industry Data Security Standard (PCI DSS).

Furthermore, most card providers have put in place fraud prevention measures around their cards and systems. This protects your transactions when you buy Ethereum with credit cards or debit cards on eToro.

Is eToro a Listed Company?

eToro is not a listed company. In 2021, however, the online brokerage entered into a partnership with Fintech Acquisition Corp. V – a SPAC (Special Purpose Acquisition Company) with the sole mission of taking eToro public. The broker would have been listed on NASDAQ under the stock ticker symbol FTCV.

The deal had given eToro a $10 Billion valuation and was expected to pump as much as $900 Million in direct investments into the platform. Such a huge amount would have gone a long way in not only expanding eToro’s operations but possibly improving the company’s security.

Unfortunately, though, the deal fell through and, in July 2022, the two entities mutually agreed to terminate the merger agreement. This was after the partnership failed to satisfy the conditions needed to take the company public before the expiry of the SPAC’s life on 30 June 2022.

How Many People Use eToro?

As of today, eToro had more than 34 million registered users. These are drawn from 140+ countries where eToro has an established presence. This translates to a 246% growth in user numbers since early 2020 when the platform only had 13 million registered users.

eToro Customer Service & Contacts

eToro has introduced multiple ways through which you can access help and customer support. First is their comprehensive help center.

This is home to a wide range of helpful guides like how to invest in cryptos safely on eToro, how to secure your account, and even how to buy cryptos on eToro.

It also provides detailed answers to some of the most common challenges users face when interacting with the platform.

The eToro customer support team can be accessed by opening a support ticket on the website’s Contact Us page. The response is sent via email and it may take up to 24 hours to hear back from the eToro team.

Alternatively, you may contact the team via the live chat function on the website or app. And if you subscribe to the eToro Club, you may request a call back from the eToro support team.

How to Stay Safe When Trading with eToro

We started by stating that eToro has put in place multiple highly effective security measures around its systems and apps. We would like to add that you, too, are responsible for your online security and here are a few things you can do to stay safe when trading online:

• Choose a strong password: For starters, create a strong and unique password for your eToro trader account. But even more importantly, do not share your password with anyone.
• Keep your devices clean: You will also want to keep the internet-enabled device you use to log in to your eToro trader account safe from malware. Invest in an effective anti-virus and scan your device regularly.
• Enable 2FA: We also encourage all our readers to enable two-factor authentication for both the eToro trader account and the eToro Money wallet app.

Conclusion – Is eToro Safe?

In the more than a decade that eToro has been around, it has cultivated a reputation for reliability, security, and user-friendliness. This has earned it more than 32 million registered users in the more than 140 countries where it operates. These could also have been drawn to eToro by the fact that the exchange has never been hacked.

In a bid to maintain this security record, the online brokerage has put in place multiple safeguards around its platform aimed at making the eToro website, eToro app, and eToro Money Wallet app as safe as possible.

Based on that, eToro is a safe trading platform. Create an account today to start buying cryptos, stocks, ETFs, trade forex, and more.

Risk Warning:

eToro is a multi-asset platform which offers both investing in stocks and crypto assets, as well as trading CFDs.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

eToro USA LLC does not offer CFDs