The Israeli “investment” platform Etoro expands to the US market. Seems like a great thing for residents of the 32 states their US trading platform and wallet encompasses right? Well, perhaps not right now…
Etoro expands to the US market: but do you own your crypto?
Etoro has a long history as a social trading platform and was one of the first to offer CFD’s on stocks and forex. Starting life as RetailFX in 2006 they opened their ” Etoro openbook social trading platform” in 2010. The open-book launched with a ” Copy-Trading” feature which enabled investors to copy the trades of their biggest traders.
The launch of their cryptocurrency services was seen by many as a godsend as Etoro allows deposits by credit card, and many flocked to jump on the train. Sadly the train they jumped on didn’t have any branch lines and nobody was allowed to get off at the station they needed to be at. You might be confused by this train analogy so let’s try and explain it in crypto terms:
- The train schedule promised to take you to a station – In this case Etoro promised to allow you to but Bitcoin, Ethereum, XRP and other cryptos
- Branch lines, taking you to the various stations not necessarily on the main line – Etoro tells you that you own the crypto and being a sensible investor you want to send it to the station of your choice (hard wallet, paper wallet, crypto exchange etc)
- No branch line and no station to get off of- Having followed their statement of ownership you try to withdraw your crypto to your station of choice only to be informed that this isn’t allowed
But I bought crypto and you tell me I own the crypto?
Yes, according to the etoro website:
Do I own my cryptos?
By opening a new non-leveraged BUY crypto position you own the asset rather than a CFD.*
In addition, all old non-leveraged BUY crypto positions (opened prior to 3 September 2017) were upgraded to real assets on 13 May 2018 for all users except those under ASIC and FCA regulation.
When you open a non-leveraged Buy position, it is secured with the real asset as we purchase the tokens on your behalf and register them in a segregated account under your name. Once the position is closed, we sell the coins on your behalf, and the invested amount +/- any profits or losses are converted to fiat currency.
*Please note that all cryptocurrency trades opened by users resident in China and clients of eToro Australia Capital Ltd are CFDs.
Ok so I buy them from you so they are my ownership. Great, I want to send them to my Nano S but now I encounter a problem and refer back to the Etoro website:
Can I withdraw my cryptocurrencies from the platform?
You are not able to move cryptocurrencies on or off the eToro platform, without converting into fiat currencies. The eToro wallet, which was released in the last quarter of 2018 and is being rolled out gradually, will enable eligible customers to store, transfer, convert, send and receive Crypto assets, subject to certain limitations specified in the applicable Terms and Conditions.
Huh what’s going on here? Well it’s simple, like in the image above, you have gone to your local car dealership bought a car but they refuse to give you the keys to allow you to drive the car. Etoro claim you own the crypto but ownership of crypto involves owning the private keys and as they ” look after it for you” you actually do not own the crypto purchased, just like the car from the shady dealership.
Sure, the statement above states that the gradual roll-out will allow removal of this limitation but a quick google search shows that the majority of Etoro customers have not had this option activated yet.
Self proclaimed “recovering bitcoin addict” and unwavering supporter of Ripple’s XRP cryptocurrency, Tiffany Hayden has long been on the warpath for Etoro and their claims of crypto ownership for customers. Frustrated by the lack of a lack in change of approach by Etoro took to Twitter to voice a sarcastic example of this method of working
For this event, I’m definitely going to give eToro a pair of tickets. They can’t have them or use them, but they will ABSOLUTELY belong to eToro, who will be able to look at them online whenever they want!😃$XRP #XRPTheStandard https://t.co/pg30aU5DpQ
— Tiffany Hayden🧢 (@haydentiff) March 4, 2019
Could there be light at the end of the tunnel with the announcement that Etoro expands to the US market? Well on the face of it nothing is changing at any kind of speed as Etoro is rolling out the same business model to begin with.
However, and interesting development that could see the overall climate at Etoro improving (lower fees, faster transactions, and a gateway to transfer any digital currency) has emerged. Yoni Assia, the founder and ceo of the Etoro social trading platform has been learning about XRapid and was proud to tweet this information out
— Yoni Assia (@yoniassia) March 7, 2019
Any partnership between Etoro and Ripple for Etoro to utilise Xrapid would be a huge boost for their clients. Judging by his smiles and the hashtags used in the tweet we would like to think that will be the case and that buyers of all cryptocurrencies will soon be able to really own the Etroro bought cryptos (and get lower fees in the process).