Is eToro Safe?

Is eToro safe?

eToro is a stock and ETF broker, CFD trading platform, and crypto exchange. The Israel-based platform has more than 25 million users worldwide. It’s traded in the US, Canada, the UK, Europe, South America, and the Middle East. eToro is regulated by the UK’s Financial Conduct Authority (FCA), CySEC, and ASIC (ASIC). eToro USA is a FinCEN- and FINRA-registered money services business (FINRA).

eToro manages over $9.4 billion. FDIC insures cash deposits and SIPC investments. The company has never reported a security breach or client money loss. eToro deserves your trust. This trading platform is regulated like many of its US-based peers and can handle billions of dollars safely.

eToro Account Security

  • eToro has invested time and money in account security.
  • TLS encrypts all data you send to eToro.
  • eToro protects its data with firewalls and cold storage. They hire ethical hackers to find firewall flaws for bug bounty programs.
  • Multi-factor authentication protects user accounts. When MFA is enabled, you must log in with your phone.
  • Cybersecurity professionals monitor eToro’s network 24/7 for hacks and data leaks.

eToro’s Revenues and profits

eToro makes 87 percent of its money through spread fees. When you open a trade, you’ll see a “bid price” and a “ask price” (a price you have to pay when buying an asset). The gap between these two prices is called the spread. eToro makes more money from larger spreads.

eToro Bankrupt?

eToro’s structure is similar to most brokers. Your securities are held in a segregated bank account. In practice, you would have to wait (months or years) for the financial authorities to identify your assets and let you transfer them to another broker. If eToro went bankrupt, clients’ segregated money investments would be returned, minus any administrative costs. If everything worked this way, the protection amount would be a formality.

Regulation-based investor compensation

  • The Cyprus Investor Compensation Fund (ICF) protects up to €20,000 for eToro (Europe) Ltd. clients.
  • FSCS compensates investors up to £85,000 for eToro (UK) Ltd. clients.
  • FINRA compensates US investors up to $500,000 in financial assets, and FDIC protects cash up to $250,000.
  • ASIC has no protected investment amount.

Please note: If you invest in crypto, you won’t get the above protections.

Free 1 Million Euro/GBP/AUD Investment Insurance from eToro

eToro offers clients free insurance from Lloyd’s of London, one of the world’s leading insurance providers, covering up to 1 million Euro, GBP, or AUD (depending on the region). All eToro clients get insurance automatically; no registration is required. The policy covers losses due to eToro’s bankruptcy, misconduct by eToro or its employees, and theft of financial instruments.

My Thoughts

  • I think eToro is safe. It’s easy to trade crypto and other assets.
  • The social trading features make it stand out from other exchanges and brokers.
  • You can follow traders from around the world, chat with them, and copy their trades.
  • A beginner can trade like a pro. It’s fun and can help you learn and make money.
  • You can also use leverage and short, which you won’t find with many other brokers. Be smart!
  • All-in-one trading platform with unique features. I think the features make up for the price. Overall, it’s a 5/5 experience.

If you would like to try eToro risk-free why not try the free demo account first: eToro Demo Account

Disclaimer: 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. 68% 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. 

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.