It has been announced today that eToro has plans to launch a crypto exchange and wallet for the US market.
The multi-asset trading platform, known for its copy trading offering, made the announcement at Consensus 2018 in New York, following the completion of its Series E funding round of $100m.
“We believe that in the future all assets will become digitised,” said Yoni Assia, Co-founder and CEO of eToro, in a release. “Crypto is the first step on this journey and we are excited to share our plans to launch an exchange and wallet. We know that both have been eagerly anticipated by our customers.”
The company's new US managing director, Guy Hirsch, said in the same release he believes in the country’s appetite for cryptocurrencies is growing. “eToro empowers investors with a platform that gives them access to the assets they want, shared knowledge and ease of transaction. We know that there is a strong demand in the US for crypto and we are excited to be able to offer US investors the opportunity to learn about and invest across multiple cryptocurrencies.”
And with cryptotrading growing in volume over the past eighteen months, regulators have been taking a close look at the market.
“To be fair to the regulators, they’ve had this land on their doorstep in the last couple of years. It is a case of sit back and watch it develop. The regulators don’t want to stifle innovation either, that’s certainly the case in the US,” says Matthew Newton, account manager at eToro.
The primary concern surrounding cryptotrading is the lack of understanding of the subject matter and the ease of investment without protection. “Cryptocurrency is just another way for opportunists to be opportunistic, it’s ultimately human nature with the people who get caught who offer illicit services and people who fall foul of them.
“It happened with stocks, it happened with FX, it will happen with cryptocurrency, but it’s also been going on long before both. All we can do is ensure we provide a legitimate service and comply with KYC and AML as well as the FCA and the Cyprus Securities & Exchange Commission (CySEC).”
“We have to be careful with what we do and how we vet clients before joining the platform; we’re under the watchful eye of the regulator. As a regulated broker, we have a rigorous KYC questionnaire that can cause quite a bit of conflict in order to make sure each client has some awareness.” Says Newton.
Newton feels a more proactive approach and can help boost reliability and restore trust in cryptotrading.
“We also feel we have an educational responsibility in the industry - we generate a lot of resources to educate traders on what blockchain is, the particular cryptocurrency or why everyone is excited about it. The trend is that people jump in when they see the price moving,” he says.
It is that hype that has also led to scrutiny over which coins eToro offers trading options on, and indeed, a responsibility to vet them on behalf of the traders.
“You’ve got to be careful and it’s why we don’t have the same broad selection of coins that you see on exchanges. We perform a rigorous selection process for each coin and project as well as sticking to a checklist that traders would look at. We can’t just add anything to the platform.
“We can’t predict the future, but the largest crypto communities and coins have a lot of legitimate setup - I can literally walk into the Ripple office - that gives us confidence in the projects. Other questions we ask are: Is there a community; are there developers, or, what is the value proposition? For instance, it’s very clear that Dash is a legitimate coin and its project has potential.”
But for all the postulation into the future success of various coins and tokens, or indeed, the multitude of whitepapers that outline them, Newton believes that the future of the cryptomarket relies heavily on regulation.
“If we want to see institutional adoption there’ll have to be regulation which we welcome and if this market wants to get to the next level, it’ll be necessary. It wouldn’t be realistic for this market to continue going how it’s going without regulation.”