The U.S. Securities and Exchange Commission (SEC) continues its aggressive crackdown on the cryptocurrency sector, reaching a settlement with eToro.
The popular online broker will pay a $1.5 million fine for offering cryptocurrencies without proper registration as a broker. The SEC accuses eToro of offering cryptocurrencies that could be considered securities, without holding the necessary licenses.
Regulation by enforcement
For a long time, the United States has lacked clear regulations on which cryptocurrencies should be classified as securities. In the absence of new laws, the SEC has adopted a “regulation by enforcement” strategy. This means imposing fines and settlements on companies to set an example for the rest of the industry about what is and isn’t allowed.
With this settlement, the SEC seems to be sending a strong signal about what constitutes illegal trading. However, there remains significant uncertainty for other crypto platforms.
Bitcoin and Ether remain available
As part of the settlement, eToro has decided to halt trading in most cryptocurrencies, except for Bitcoin, Bitcoin Cash, and Ether. These cryptocurrencies are not considered securities by the SEC. This move further confirms the status of both Bitcoin and Ether, which are also the only cryptocurrencies for which spot ETFs have been approved in the United States.
The crypto community has had mixed reactions to the news. While some are relieved that Bitcoin and Ether remain unaffected, there is lingering uncertainty about the status of other tokens. “By removing other tokens, eToro is choosing to comply with the regulatory framework,” a spokesperson for the SEC stated.
Legal battles with Coinbase and Kraken
The fight over cryptocurrency classification is far from over. The SEC is currently involved in legal battles with major crypto exchanges like Coinbase and Kraken. These companies are aiming to prove in court that tokens such as ADA (Cardano), MANA (Decentraland), and SOL (Solana) are not securities and, therefore, do not fall under the SEC’s jurisdiction. These cases are expected to play a crucial role in clarifying the rules for crypto trading in the U.S.
Impact on the industry
The outcome of this settlement and ongoing lawsuits will significantly shape the future of the crypto sector in the U.S. For now, it appears the SEC is determined to tighten its grip on the industry until a clear regulatory framework is established. eToro’s decision to withdraw from most cryptocurrency trading may serve as a precursor to how other platforms will react to comply with the SEC’s increasingly strict requirements.
