What happens if eToro goes bust?

Milo

I was just wondering, let's say I bought some stocks, crypto or any other asset with eToro and then the company closed down before I'm able to withdraw my money. What will happen? Is that money lost?

reigel

It would be based on the terms and conditions (or terms of service) that you agreed upon when you registered with eToro. Take note that not all users are under the same T&C so be sure to read them under the right operator (e.g. eToro UK Ltd. or eToro AUS).

In case that you're trading real stocks and these are under your name then you will be able to liquidate these shares. Do take note that this is only applicable for REAL stocks and not derivatives which are CFDs (contracts for difference). CFDs are traded based on the performance of an asset so you actually do not own them at all.

But also keep in mind that eToro is part of the Investor Compensation Fund for Customers of Cypriot Investment Firms (CIFs). This fund will be used to compensate their clients should their operations cease and they fail to meet their financial obligations. In this way, you will be able to file for a claim for the remaining funds or equity in your account. The current coverage for each client is up to 20,000 Euros. This should give you some peace of mind in case eToro goes bust.

Milo

reigel So you mean I will receive a claim of 20,000 euros if eToro shuts down???

reigel

Milo No. The amount that you can claim in case eToro goes bust is the same amount as your equity. So let's say your account's equity has 10,000 euros, that means you will be able to get that amount back. But if the equity size is let's say 25,000 euros then you can only claim 20,000 euros since that is the maximum amount that is covered under the ICF for every eToro user. I hope this is clear with you. In case you want to know more, I suggest reading more about eToro money matters. You might also want to check out their insurance policies here.