Introduction
eToro is a multi-regulated broker under the stringent guidelines of several top-tier and high-end financial authorities. Under the eToro group, it supports clients from over 140 countries via several licensed eToro companies.
Each entity that has a license from a financial authority is required to comply with specific regulatory guidelines and these rules may vary from one regulator to another.
And because every company of eToro needs to conform with the applicable local regulatory framework, there could be differences in the available services and products that they offer for their clients based on their country of jurisdiction and the regulated entity that operates the platform.
77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Is eToro Regulated?
Yes. eToro is operated by several companies on different jurisdictions which have licenses from financial authorities.
Cyprus Liense
eToro (Europe) Ltd. is a Cypriot Investment Firm (CIF) with a company registration number of HE20058 and is regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number 109/10.[1]
eToro (Europe) Ltd. also holds a cross border license to provide services for clients who are residents of the European Economic Area member states and those outside of it.
UK Regulation
In the UK, operations are under eToro (UK) Ltd., which has a company registration number of 7973792, is authorised and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.[2]
eToro (UK) Ltd. also has a cross border license to provide services for traders who are residents of the European Economic Area member states.
License from ASIC
For clients in Australia, the services are operated by eToro AUS Capital Pty Ltd., which arranges for its clients to be provided services by eToro Europe.[3]
It has an Australian Business Number (ABN) of 66 612 791 803 and holds an Australian Financial Services Licence (AFSL) 491139 that has been issued by the Australian Securities and Investments Commission (ASIC), and regulated under the Corporations Act (Commonwealth).
The Markets in Financial Instruments Directive
Both eToro Europe and eToro UK are operating and in compliance with the MiFID which aims to provide harmonious regulations for states that are participating with this directive.
In case you don't know:
The MiFID or Markets in Financial Instruments Directive is a law that was passed for increasing transparency across financial markets in the European Union and improve consumer protection. It has been in implemented since 2007 but in 2018, it was replaced by the updated MiFID II directive.
eToro USA
eToro USA LLC operates the platform for US residents and is registered with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business with registration number of 31000176049756.[4]
State-Level Regulations in the US
eToro also has existing licenses with state-level regulators.[5] Please refer to the table below for more information.
| State | Granted License | Financial Authority |
|---|---|---|
| Alabama | Money Transmission License (754) | Alabama Securities Commission |
| Alaska | Money Transmitter License (AK-MT-011361) | State of Alaska, Division of Banking & Securities |
| Arkansas | Money Transmitter License (116264) | Arkansas Securities Department |
| Connecticut | Money Transmission License (MT-1769299) | Connecticut Department of Banking, Consumer Credit Division |
| Florida | Money Transmitter License (FT230000255) | Florida Office of Financial Regulation |
| Georgia | Seller of Payment Instruments License (64040) | Georgia Department of Banking and Finance |
| Idaho | Money Transmitters License (MTL-237) | Idaho Department of Finance |
| Illinois | Money Transmitter License (MT.0000380) | Illinois Department of Financial and Professional Regulation |
| Iowa | Money Services License (2018-0141) | Iowa Division of Banking |
| Louisiana | Money Transmission License | Louisiana Office of Financial Institutions |
| Mississippi | Money Transmitter License | Mississippi Department of Banking and Consumer Finance |
| Nebraska | Money Transmitter License | Nebraska Department of Banking & Finance |
| New Mexico | Money Transmitter License | New Mexico Regulation & Licensing Department, Financial Institutions Division |
| North Carolina | Money Transmitter License (182621) | North Carolina Commissioner of Banks |
| North Dakota | Money Transmitter License (MT103394) | North Dakota Department of Financial Institutions |
| Ohio | Money Transmitter License (OHMT153) | Ohio Department of Commerce Division of Financial Institutions |
| Oregon | Money Transmitter License (30223) | Oregon Department of Consumer and Business Services, Division of Finance and Corporate Securities |
| South Dakota | Money Transmitter License (MT.2159) | South Dakota Department of Labor Regulation, Division of Banking |
| Texas | Money Transmitter License (3181) | Texas Department of Banking |
| Vermont | Money Transmitter License (100-126) | Vermont Department of Financial Regulation, Banking Division |
| Washington | Money Transmitter License (550-MT-115893) | Washington Department of Financial Institutions, Division of Consumer Services |
Determining the Regulation That Covers Your Account
During the registration process, you will be required to read the Terms and Conditions, which you need to be in agreement with in order to open an account.
You will be able to see on this particular Terms and Conditions the specific entity or operating company including the regulation that applies to you.
You can also find this information by going to your profile settings.
Verification of Trading Account
In compliance with financial service regulations, eToro is required to verify all trading accounts by requesting certain documents and actions from their clients. In most cases, they will require the following:
- An ID issued by the government
- Proof of address
- Verification by phone
Note: Additional identification documents might be requested by eToro aside from the ones listed above.
Verification must be done to lift account restrictions that may be applied to trading, closing an account and withdrawals.
Anti-Money Laundering Policy
With eToro Europe and eToro UK both being regulated companies, they need to apply appropriate measures against money laundering as they are mandated to comply with the strict requirements of financial authorities. This is the reason why companies like eToro need to carry out account verification and other preventive measures.
AML 101 - Did You Know?
To prevent money laundering other illegitimate financial activities, countries including the UK and Cyprus have passed legislations and are following the international standards and treaties specifically from the European Union Directives.
Meeting the Minimum Capital Adequacy Ratios
Under the existing framework of the European Capital Requirements Regulation, eToro Europe and eToro UK are both required to have separate funds and must constantly meet a minimum capital ratio. As an investment firm, they are mandated to apply strategies and processes to have adequate internal capital and these are regularly rechecked internally.
Segregation of Client Accounts
All client funds (margin not included) and assets are kept separate from the company’s own assets to protect the funds of their traders and these are internally and externally supervised. This policy is also applied to differentiate between client investments and eToro’s working capital.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% 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.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
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 and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
References
- ^ Cyprus Securities and Exchange Commission | Etoro (Europe) Ltd CySEC
- ^ eToro (UK) Ltd FCA
- ^ Search Company and Other Registers ASIC
- ^ MSB Registrant Search FinCEN.gov
- ^ Licenses & Disclosures eToro