You may know eToro for their incredibly creative ad campaigns.
Or maybe for being the pioneer of the “social trading” concept.
Outside of their advertising and innovative concepts, is eToro all that?
Let’s find out!
eToro isn’t technically an exchange in the purest sense of the word, as it doesn’t have an order book to match buyers and sellers. Instead, eToro is a brokerage offering direct access to cryptocurrency investments.
While eToro has been in operation since 2010, it’s only been available to US users since 2018 when it gained its US brokerage license. However, eToro USA is in the process of a gradual US rollout and isn’t currently available to users in all states.
At the present time, trading is available to residents of 41 states. You can check if it’s currently available in your state on the eToro help section.
If your state isn’t yet listed, then you aren’t yet eligible to use eToro. US citizens residing outside of the US are also not permitted. Besides, some features may not be available in all states where eToro is currently available.
eToro offers more options for trading in different cryptocurrencies than any of its global competitors. Some of the available coin options include:
You can fund your eToro account in one of two ways. Either by linking your online bank account to your eToro account or by sending a wire transfer from your bank to your eToro account. When you click the “Deposit funds” button for the first time, you’ll be prompted to choose one of these methods.
If you choose to link your bank account to your eToro account, then the web interface will walk you through the steps. You’ll have to have your bank credentials handy and enter them when prompted.
If you choose to link your bank account, you can use this funding method in the future without having to re-enter your details.
If you opt to fund your eToro account with a wire transfer, then eToro will provide you with the necessary account details you’ll need to send the payment.
You’ll then have to instruct your bank to send the payment using your usual bank web login portal. eToro requires that you upload a screenshot of the ABA confirmation document to its customer service portal.
Both of these funding options will require a waiting period before the funds reach your account, so you won’t be able to start trading as you would with an exchange such as Coinbase or Coinmama that accepts credit card payments.
There is a minimum deposit requirement of $50 for online banking, while wire transfer deposits have a higher minimum requirement of $500. Both of these minimum deposit requirements apply for the first deposit and any subsequent top-ups.
Deposits made by both online banking and wire transfers are capped at $10,000 per day.
The fee structure for trading on eToro for the major cryptocurrencies is shown below. For the ones not shown, the range is 1.9%, up to 5% for trading Tezos.
There are no fees for withdrawals from your eToro account, but conditions apply. Funds deposited via online banking must have been on your eToro account for a minimum of six days before you can withdraw them.
Additionally, the minimum withdrawal value is $50, you must have funds available to withdraw, and your account must be verified.
As a regulated trading platform, eToro offers a high degree of security, and to date, it hasn’t been hacked. All data is encrypted by default.
It’s also recommended that you take advantage of the two-factor authentication feature to provide an additional layer of security to your account, ideally using a service such as Google Authenticator or Authy.
The eToro wallet exists alongside the main eToro trading interface. If you fund your account in the way described above, your funds are held in custody by the eToro exchange. The eToro wallet is a separate hot wallet enabling you to keep your funds under your own private key.
Within the wallet interface, you can transfer funds from the eToro platform to your wallet address, swap one supported cryptocurrency for another, and send and receive cryptocurrencies from other wallet addresses.
Like other features of eToro, the wallet functionality is being rolled out to US users on a state-by-state basis.
However, it’s still more secure than keeping funds on an exchange, as even with a hot wallet you keep your own private keys.
eToro offers two separate smartphone apps. One is the main trading interface where you can view your account balances, make trades, and view live cryptocurrency prices in real-time.
The eToro wallet is a separate app, offering the same features as described above.
You can access first-line support through the online forum, where you can search for answers to questions in the eToro database. If you need to speak to someone, then you can submit a ticket or call their customer support line.
eToro has average customer service reviews on Trustpilot. However, it’s evident that the company is attempting to respond to negative reviews left on the platform.
eToro was founded in 2007 as RetailFX, by Israeli brothers Yoni and Ronan Assia, along with a third co-founder, David Ring. The Copy Trading feature launched in 2010.
Between 2010 and 2018, eToro gained private investment worth over $162 million from firms including Spark Capital and SBI Holdings.
Outside of the US, traders use eToro for many different asset classes beyond cryptocurrencies, including stocks and contracts for difference (CFD.) It’s been licensed to operate in the UK by the Financial Conduct Authority since 2013 and has been operating in the cryptocurrency space since 2014.
In 2019, the company went on an acquisition spree, acquiring Danish blockchain company Firmo, and Belgian cryptocurrency portfolio tracker app Delta.
Copy Trader is eToro’s trademarked program where users can replicate the exact portfolios and trading strategies of top traders. Why would a top trader allow other users to copy them?
Because eToro incentivizes them to do so. As a user, you won’t see any differences in fees, which are applied the same as if you opt to implement your own trading approach.
Within the Copy Trader interface, you can view each of the “popular traders” and their trading performance over time, including a risk score, which illustrates how much risk the trader is willing to take to generate their rewards. You can also see their returns over the last 12 months and how many other users are copying their strategy.
If you decide you want to participate in Copy Trader, you simply choose the amount you want to invest and click “Copy” and eToro does the rest. It will distribute your investment across the same positions as your chosen trader.
There are some rules and limitations. For example, the minimum amount to copy a popular trader is $200, and the maximum number of users you can copy is 100 at any one moment. There are many other approaches within Copy Trader, which you should review in detail before deciding to participate.
eToro offers other social elements. For example, outside of Copy Trader, anyone can choose to share their portfolio and returns. Users can chat about different approaches directly on the platform.
Anyone who qualifies to participate in Copy Trader as a popular trader is eligible to earn a 2% fee from their portfolios that other traders copy. There’s more information on the Copy Trader Partner program page.
To create a basic account only involves providing your basic details such as email address and password. You can also create an account using your Facebook or Google credentials.
However, this will only give you access to the interface itself. To access the full features of eToro, you’ll need to get verified, which involves undergoing a KYC check.
eToro USA LLC is registered with the Financial Crimes Enforcement Network as a Money Services Business. This means it is required by US law to collect certain data on users, and you will have to verify your account to access many of the trading features, including withdrawals.
eToro USA requires a copy of your government-issued ID and your social security number to verify your account.
You should be aware of the risks of handing over your ID details to exchanges. If the exchange is hacked, then your details may be leaked. You could opt to use other exchanges that don’t require ID or use a P2P service like LocalBitcoins.
However, there is often a trade-off between the security of regulated exchanges that are highly secure and less vulnerable to hackers but that require your ID. At the other end of the spectrum are unregulated exchanges that are more prone to hacks, but don’t need a KYC check.
Although there are other social trading platforms, eToro is the only one that’s currently allowed to operate in the United States. However, even in other countries where there are multiple platforms, eToro has the edge in many respects, given it was the first to market and has spent years developing its platform.
eToro is one of the oldest operators in the cryptocurrency space and has developed a strong reputation for trust and reliability. In many respects, it offers similar functionality to other exchanges, but the social trading aspect is its unique selling point.
As the only such platform operating in the US, it’s a solid choice particularly for newcomers looking to replicate the strategies of high-performing traders.