US investors permitted
A trading cryptocurrency guide must provide reviews of all of the top crypto exchanges out there, so that you can find the best cryptocurrency exchange site for you. This review of eToro consists of four parts: general information, fees, deposit methods and security.
eToro was originally not a cryptocurrency exchange, but rather a general trading platform. It comes from the United Kingdom and launched as early as 2007.
United Kingdom is the country which without a doubt has the most cryptocurrency exchanges in the world. At least that we know of. A non-exhaustive list of exchanges from the UK (in addition to this one) includes Exmo, CEX.io, CoinEgg, Livecoin, DSX, LocalTrade, Bittylicious (funny name by the way), CoinMate, Indacoin, MixCoins, Paybis, Vaultoro and Instant Bitex.
The platform enabled cryptocurrency purchases/sales in January 2017. And now, it aims to be your number one platform for cryptocurrency trading.
The trading platform is also available in 16 different languages.
eToro does not prohibit US-investors from trading. Any US-investors interested in trading here should in any event form their own opinion on any issues arising from their citizenship or residency.
Seeing as eToro has been around for so long, it has a wide variety of trading options available to its users. One such option is the Popular Investor-option, through which you can copy the moves of other successful traders. Another option is the “Crypto CopyFunds”-option. With that option, you can copy a cryptocurrency portfolio set up by an elite group of traders. There are an abundance of such options.
For a new investor, the trading platform’s “virtual money accounts” might come in handy. Virtual money accounts are accounts where you get “fake money”, USD 100,000, that you can trade and invest with. In this way, you get a sense of how trading and investing works prior to taking a second mortgage on your house and doing it for real. With the virtual money accounts you will also have access to detailed market analysis and other information that will help you in your investment decision-making.
eToro Trading fees
This trading platform is different from most other trading platforms for cryptocurrencies in the sense that it doesn’t charge fees like most other. Instead, it charges fees in a more “traditional” way. Namely, through having a specified spread between the sell price and purchase price they offer.
For instance, if a seller wants to sell Cryptocurrency X (made up) at eToro for USD 100, and a buyer wants to buy the same asset, eToro’s price will be slightly higher. How much higher depends on the spread. So if the spread is 1%, the buyer can buy the asset on the trading platform for USD 101. The difference between the sell price and the purchase price (USD 1), goes to the trading platform. The below is a printscreen (as of 17 November 2018) of the different spreads for the 10 biggest cryptocurrencies that the platform supports trading in:
As you can see from the above picture, the spreads range from 0.75% to 2.90%. Exactly where on the range depends upon which cryptocurrency you want to trade in.
It is difficult to compare the above fees with the fees of other cryptocurrency trading platforms as the systems are different. Generally speaking though, a spread of 0.75% would roughly correspond to a flat fee of 0.375% (seeing as trading platforms with flat fees then would make the same amount of money per trade as if they would have had spreads instead). A flat fee of 0.375% is very high, and the industry average on a global scale is 0.25%. Accordingly, a spread of 0.75% (which is actually also eToro’s lowest spread) is very high compared to regular centralized cryptocurrency exchanges. A spread of 2.90% would essentially be the same as a flat fee of 1.45% and this is also an absurdly high fee. As mentioned above, however, there are differences between the types of trading platforms that makes this fee comparison somewhat misleading.
eToro Withdrawal fees
We have not been able to find eToro’s withdrawal fees for when withdrawing cryptocurrency. This is potentially a risk for you as an investor. We have however found information on the withdrawal fee for fiat currency (USD 25 per withdrawal). If it would be the same withdrawal fee for withdrawing cryptocurrency, this would be considered extremely high. The global industry average withdrawal fee is 0.0008 BTC. USD 25 today equals 0.005 BTC (six times more than the industry average).
All in all, the trading fees and withdrawal fees at eToro are high.
At eToro, you can deposit through both wire transfer and credit cards. This can be helpful especially for newer crypto investors.
We run all exchange-websites in Mozilla’s Observatory-test (https://observatory.mozilla.org/). The score in such test is one of many indicators of the exchange’s security. eToro received an F-score in this test. This is below industry average and is thus not a competitive advantage at all for eToro. However, seeing as eToro is a trading platform that has been around (in one shape or another) for 11 years and never been hacked, it might be that the F-score in the Observatory test is not fully indicative of the security at eToro.
As mentioned above, this exchange supports credit card deposits (alone or through the use of any of its associated payment service providers). Other cryptocurrency exchanges that also have this option include: