eToro regulation

Trying to find out whether eToro is regulated? Not sure which authorities are overseeing eToro and why this matters?

Rest assured, the lack of regulation at eToro is not a reason for worry. Our brokerage experts have determined that eToro is a fully regulated broker, overseen in UK, USA, Cyprus, Australia. We gathered all the information on the regulatory profile of eToro and will explain why this matters.

Why eToro is trustworthy

Why [Broker name] is trustworthy

Gyula Lencsés, CFA

Forex • Derivatives • Market Analysis

During my professional career, I have traded many currency pairs on behalf of mutual funds, both as a speculative investment and as a hedging tool; racking up trades worth billions of dollars. I combine that experience with my active role in testing forex broker platforms to steer users to the best brokers for their needs.

Learn about our methodology

Gyula Lencsés, CFA

Forex • Derivatives • Market Analysis

I have personally tested several brokers globally and I am familiar with the regulatory and licensing procedures of at least a dozen financial authorities globally. Here are my key insights into the regulatory status of eToro as of September 2024:

• eToro is regulated by several authorities of which at least one is top-tier, which is vital for safeguarding your money.
• eToro must separate client funds/assets from its own operations; this makes all the difference for the safety of your investments.
• As eToro is regulated by several authorities, it is super important that you open an account with an entity that has top-tier regulation.
• Explore the services of eToro in our comprehensive eToro review for 2024 and browse other top-tier regulated brokers with our unique Find My Broker tool.

Think of a broker with strict regulatory oversight like a lifeguard at the beach. Just as the lifeguard keeps you safe in the water, offering immediate help when you need it, brokers operating with top-tier regulation protect your investments. They make sure your investments are secure and handled with integrity and transparency.

eToro operates in several countries and is supervised by the following financial authorities:

• European countries - Cyprus Securities and Exchange Commission (CySEC)
• UK - Financial Conduct Authority (FCA)
• Australia - Australian Securities and Investment Commission (ASIC)
• United States - Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA)
• Seychelles - Financial Services Authority Seychelles (FSAS)

Why does all this matter? We are contacted by an alarming number of people who ended up working with unregulated brokers and they share with us some sad and frightening stories. Here’s an example.

Marco invested a substantial amount using what appeared to be a credible online trading platform. Initially, his investments showed gains, and he was able to make several withdrawals without issues. Encouraged, he increased his investments, but when he tried to withdraw some profits after a successful trade, his requests went unanswered, and customer service became unreachable. Further investigation revealed the broker was not regulated by any financial authority. Eventually, the platform vanished overnight, taking John's investments with it, leaving him with no recourse to recover his funds.

Choosing a broker with top-tier regulation means you're in safe hands. This level of strict oversight ensures that your investments are protected, you're getting fair pricing, and trading conditions are transparent and favorable.

As a broker with top-tier regulation, eToro is legally required to keep the funds and assets of its clients separate from its own money. This is a game changer in terms of the safety of your investments.

Client fund segregation is like having your money in a separate safe from eToro’s own cash. Thus, if your broker ever runs into financial trouble, your funds won't be touched to settle their debts - they're entirely off-limits. It’s a crucial setup because it protects your money, ensuring that what you’ve invested stays secure and accessible only to you. This segregation is a requirement imposed by top-tier regulators and not something you can request your broker to do. You will only have access to this safety net if your broker has the appropriate regulation.

In the highly unlikely event that eToro commits fraud and uses client assets for its own purposes, you can still recover your money if you have access to investor protection.

eToro operates several legal entities and serves customers based on their residency. This matters because the entity you belong to defines the amount of investor protection you get.

• Citizens of the United Kingdom can open an account at eToro (UK) Limited and thus they will be protected by the FCA. If eToro becomes insolvent, eToro UK clients can expect to be compensated by the maximum amount of £85,000 guaranteed by the Financial Services Compensation Scheme (FSCS).
• US clients will open their account at eToro USA LLC, which enjoys SEC and FINRA protection and is a member if the SIPC investor protection program. This offers investment protection up to $500,000 (including $250,000 for cash).
• Australian clients are served by eToro AUS Capital Ltd, ABN 66 612 791 803 AFSL 491139, which is regulated by ASIC, the Australian financial authority. ASIC however does not provide any obligatory investor protection for a pre-set amount.
• Other investors will have their live trading accounts with eToro (Europe) Limited, which is regulated by the Cypriot watchdog, CySEC. The amount of investment protection coverage at eToro Europe is a maximum of €20,000. This threshold is set by the Cypriot Investors Compensation Fund.

eToro also offers private insurance to certain clients of some entities. This is a €/AUD 1 million insurance for cash, securities and CFDs. It is provided by Lloyd's and applies in the event of eToro's insolvency. This is a great addition as not all brokers provide another layer of protection above the regulatory one. However, it is only available for Platinum + and Diamond Club customers of eToro (Europe) Ltd and eToro AUS Capital Limited. It's important to note that the insurance has a total payout limit of €/AUD 25,000,000. This means that the maximum amount paid out to all eligible claimants combined is €25,000,000. If total claims exceed this amount, you may not get back all of your losses. Plus, of course, it could be withdrawn by eToro at any time.
Here is a handy summary table for easy comparison:

There is no investor protection for cryptos.

eToro also provides negative balance protection for CFD trading, but only for retail clients from the European Union and Australia. Professional clients are not covered with any negative balance protection.

Since eToro is regulated by multiple authorities, it's crucial to open an account with an entity that has top-tier regulation. This ensures your investments are always protected under the highest standards.

Whenever possible, avoid signing up with entities that are regulated in off-shore countries such as the Seychelles, the Bahamas, St. Vincent and Grenadine, etc. While you may have access to a much higher level of leverage for your trades, this is extremely risky and you run a much higher risk of losing all your invested money.

In addition, rules and regulations imposed by regulators in these countries are typically less severe, potentially damaging the safety of your investments. If you are offered the option to choose which entity you open an account with, go with the one that operates under a stricter regulator.

For detailed insights into trading conditions, costs, and service quality at eToro, check out BrokerChooser's eToro review for 2024. All our broker reviews are based on the analysis of nearly 600 data points and direct experience. When we review a broker, we go hands-on by opening a real-money account and trading on its platforms, giving us a complete view of what it offers and how it performs.

The BrokerChooser team has personally tested and reviewed more than 100 brokers globally, all of which have top-tier regulation. All our experience and expertise is included in the Find My Broker tool. Simply answer a few questions and get a personalized broker list.