Our take
4.5 out of 5 stars
If you're a crypto enthusiast in the United States, it can feel a little frustrating at times. The US has crafted a variety of regulations designed to protect consumers. Unfortunately, these same regulations have made it difficult to hack out a career in crypto trading.
While some trading strategies and styles may work well within the confines of current legislation, American traders have felt limited in other ways, particularly when it comes to crypto derivatives. Perhaps most frustrating of all has been the response of many international crypto platforms that have barred US citizens in response to these rigorous restrictions.
Fortunately, this eToro review will introduce you to a UK-based exchange that knows how to play nice with US regulations and has the American clientele to prove it.
What Is eToro?
Established in 2007, eToro is headquartered in the United Kingdom and provides crypto trading solutions for more than 17 million consumers located in 100 countries. These include millions of Americans in 42 states and Washington, DC, as of 2018.
The exchange began as a graphics-heavy foreign exchange (forex) platform. As a result, it easily converted its tools and resources to start serving crypto traders.
The company remains amid a public merger with SPAC, a company headed by Betsy Cohen. Cohen is the Chair of Fintech Acquisition Corp IV.
Today, eToro sits at a value of approximately $10.4 billion, and investors have raised roughly $650 million. These investors include ION Investment, Fidelity Management & Research, Third Point LLC, Softbank Vision Fund II, and Wellington Management.
eToro Users: What You Need to Know
Besides trading in cryptos, investors located outside of the US can trade in other asset classes, including stocks and contracts for differences (CFDs). As cryptocurrency platforms go, you'll find some differences in capabilities for the US versus non-US residents.
American residents of registered states and territories can trade in digital currencies. Registered states and territories include:
- Nevada
- Delaware
- Puerto Rico
- Tennessee
- New York
- New Hampshire
- Minnesota
But if you're a resident of places such as the US Virgin Islands, American Samoa, Guam, or Hawaii, you can't trade on eToro. As for states not mentioned above? eToro is registered in each one, which means residents can create accounts and trade cryptos through the site.
What else do you need to know about using this platform? Recently, eToro eliminated its much-criticized withdrawal fees in the US. That said, users are still on the hook for a $5 fee if located in other parts of the world.
Why Use eToro
If you've got a basic understanding of cryptocurrency and forex, eToro might prove a good fit for you. Among the platform's strong suits are its user-friendly interface and continued heavy graphical focus.
eToro and Copy Traders
Users also appreciate the fact they can follow and imitate the actions of the most profitable traders on the site. These traders follow risk-control rules. Consider eToro an IRL boot camp permitting crypto investors to learn on the fly.
What's more, this permits retail account holders to mimic their moves and strategies. Of course, copy trading comes with few guarantees and the possibility of losses, so you should approach it at your own risk.
eToro and Equity Trading
If you're a fan of equity trading and live in the US, eToro isn't currently the right platform for you. The company continues to work towards this option for its customers, and we'll keep you posted when it becomes available.
When it comes to rating crypto platforms, eToro will need to get up to snuff in the area of equity trading.
Opening an Account
With eToro, opening an account is a cinch. Just submit your information, and the platform will verify your identity. Once the verification process completes, you'll gain access to a new account.
With as little as $50, American and Australian users can open an account. For residents of Algeria, the minimum deposit sits at $5,000. Others nations typically must provide $1,000 to open an account, representing a temporary increase from the standard $200.
How does eToro connect your bank account to your trading account? It relies on Plaid. But account-holders in the US can only open accounts with cash.
Users in some other nations may fund their accounts through any of the following means:
- A credit card
- Skrill
- PayPal
- Neteller
- iDEAL
- Sofort
- Rapid Transfer
What else do you need to know about eToro? Let's take a closer look at the trade experience you'll get with this platform.
eToro's Trade Experience
How does eToro's trade experience stand up to the cryptocurrency competition? Placing a trade is as simple as clicking on the “Trade” button while viewing the coin you're interested in on your watchlist.
You'll also see a prominent “Buy” button on your portfolio listing. If you want to sell a particular coin, click on the drop-down arrow and highlight ”Sell” from that list.
You can close an entire position. Or you can sell part of it if you’ve purchased it in more than one lot. But you can't sell off a portion of an individual lot.
In other words, if you buy $30 of Bitcoin, you must sell the entire amount rather than just $12 worth.
If you live outside America, click on “Markets” to see the other asset classes available. These include approximately 1,700 equities. You'll also have access to 47 currency pairs and about 20 contracts for differences (CFDs). What's more, you can use leverage, too.
Watchlists may be customized and shared via mobile apps. You should also know that some non-US asset classes permit you to set a stop-loss when entering a position.
But you won't find this capability in the version of the product available to American residents. You can set the maximum drawdown if you copy a trade.
eToro Fees
What can you expect in terms of eToro fees? They'll ultimately depend on your location and the assets you're trading in.
For example, American users will pay between 0.75 and 5.0 percent, based on the cryptocurrency getting traded. You need to understand that these fees are built into the price at execution, which means they're not transparent.
For non-US customers, when trading stocks, they pay no commission for long position openings or closings. As for short sales? They incur a commission of 0.18 percent of the trade value.
What's more, non-US customers buying assets other than their home currency will pay a currency conversion fee. For example, if you're a UK resident buying US stock, you'll pay this conversion fee.
Which other fees do you need to know about? If your account remains inactive for 12 months, you'll be charged an inactivity fee of $10.
American users won't get charged any fees for withdrawals, but they must withdraw a minimum of $30. Those living outside of the US will pay $5 for withdrawals.
When you transfer crypto from eToro into your own wallet, you'll also incur fees. For each coin, there are minimums, and you'll need to reference the platform's pricing and fees table to find out more.
eToro Algorithms
To better understand eToro's algorithms, we need to take a closer look at its declared mission. eToro has a stated intent of disrupting the traditional financial industry. The company also wishes to break down barriers between private investors and professional-level practices.
What's one of the ways the platform is moving towards these objectives? eToro’s CopyFunds Investment Strategies. These represent managed thematic portfolios, powered by advanced machine learning algorithms.
In other words, private individuals now have access to technology once only reserved for giant corporations. For example, eToro created a CopyFund to outperform the popular Nasdaq 100 index.
How? By studying the "investing DNA" of successful Nasdaq traders. This algorithm locates "Nasdaq experts" and then filters through their trading histories and portfolios to identify the 15 Nasdaq 100 components that these investors all tend to share.
Other factors, including risk management, are also thrown into the mix, offering a fully managed, low-risk investment portfolio. This portfolio has the potential to beat the Nasdaq 100.
Compare with the best alternative exchanges
| Exchange | ||
|---|---|---|
| Nexo | Best overall crypto lending platform. | Go to site → |
| CoinLoan | Best for crypto loan borrowers. | Go to site → |
| YouHodler | Most versatile crypto lending platform. | Go to site → |
| Bit.com | Best crypto derivatives platform. | Go to site → |
| Matrixport | Best for institutional investors. | Go to site → |
| Gemini | Best crypto exchange for U.S. investors. | Go to site → |
| Binance | Best overall crypto exchange. | Go to site → |
| Kraken | Best U.S. crypto exchange for advanced traders. | Go to site → |
eToro Review: The Takeaway
When ranking cryptocurrency platforms, eToro comes with many attractive features and advantages. The exchange boasts a highly intuitive and user-friendly website and mobile app, and it supports some of the most popular coins on the market. Best of all, eToro is available to American customers and offers a wide range of features to support their crypto trading needs.
It's also an excellent resource for those interested in learning from some of the cryptocurrency world's most effective traders through spot trading. Just be prepared to deal with high minimums for added features such as copy trading.
And if you're located outside of the US? You won't be able to take advantage of the exchange's no-fee policy on withdrawals.
Are you interested in finding out more about how this eToro review compares to others about exchanges such as Coinbase, Kraken, or Gemini? We've got you covered. Browse our comprehensive listing of the best crypto exchanges of 2021.