Do I own the crypto that I trade on eToro?

Mbiggs

Hi, I'm a little confused as to how crypto trading works on eToro. Is it similar to Coinbase where I can buy and sell real cryptocurrencies like Bitcoin, Ethereum, etc. or does it work differently? Would appreciate if anyone can clarify this for me. Thanks

vincent

Mbiggs

That would rely on whether you're trading them as actual cryptocurrency assets or through a contract for difference (CFD).

When engaging in Bitcoin, Ethereum, or any other available cryptocurrency trading on their platform as real assets, eToro will purchase these tokens on your behalf and hold them in a segregated account under your name. Suppose you choose to close a position. At that juncture, eToro will sell these specific tokens, and the resulting profit or loss from closing the position will be reflected as actual money in your account.

It's crucial to bear in mind the following:

If your account is with eToro AUS Capital Pty Ltd, you can only trade Bitcoin and other cryptocurrencies as CFDs due to regulatory compliance. Clients are not permitted to trade actual cryptocurrency assets. You will notice a "CFD" designation on the trading window to indicate that it's not a real cryptocurrency asset.

If your account is with eToro (Europe) Ltd, your Buy crypto trades involve actual tokens, while Sell crypto trades are executed as CFDs.

If your account is with eToro (UK) Ltd or eToro (Europe) Ltd, but you're a UK resident, your Buy crypto trades involve actual tokens. However, selling crypto trades are not allowed according to the regulatory guidelines of the FCA (Financial Conduct Authority) regarding the sale of derivatives.

AteNTICI

That would depend if you’re trading them as real cryptoassets or contract for difference (CFD).
When you trade Bitcoin, Ethereum or any other available crypto via their platform as real assets, that means eToro will buy these tokens and these will be under your name via a segregated account. Now let’s say you decide to close an open position. At this point, eToro will then sell these specific tokens and the profit or loss you incurred by closing the position are then going to be reflected under your account as real money.

It’s important to remember:

If your account us under eToro AUS Capital Pty Ltd, you can only trade Bitcoin and other cryptocurrencies as CFDs or contract for difference due to regulatory compliance so clients are not allowed to trade real cryptoassets. You will see a “CFD” label on the trading window so you’ll know that this is not a real cryptoasset.
If your account is under eToro (Europe) Ltd, your Buy crypto trades are for real tokens while Sell crypto trades are for CFDs.
If your account is under eToro (UK) Ltd or eToro (Europe) Ltd but you’re a resident of the UK then your Buy crypto trades are for real tokens. Sell crypto trades on the other hand are not allowed as per the regulatory guidelines of the FCA (Financial Conduct Authority) with regards to selling of derivatives.

You can read more about it here.

Mbiggs

AteNTICI So let's say my account allows me to trade real crypto, can I withdraw them as real tokens and store them into a crypto wallet?

AteNTICI

Mbiggs Yes, as long as it's real crypto and not CFD trades, you can transfer them to eToro's crypto wallet which also has the same login credentials as your trading account. You need to open this crypto wallet first before you can transfer from the eToro trading platform. After transferring them into the wallet, you have the option to keep them there since it is a secured wallet or you send them to a compatible external wallet address of your choice.

micasmith

So if I'm buying let's say Bitcoin on Etoro (real crypto and not CFD), I still need to transfer it to their crypto wallet in order to use them? There's no option to directly transfer after buying?

MaLaser0

I think that it should be described on a user agreement. Technically, currency does not belong to you. But in fact, it is yours, as you are completing operations using it.

I definitely know that when you exchange fiat for crypto, then it is totally yours. Nobody is going to take it from you or ban it, except cases if you are trying to sponsor terrorism or some other bad thing.

Asian-Trader2023

When we trade cryptocurrencies on eToro, we don't actually own the underlying assets in the same way you would if you bought them on a traditional cryptocurrency exchange and stored them in your own wallet. Instead, eToro offers a form of trading known as Contract for Difference (CFD) trading for cryptocurrencies.

terriboyle

eToro does allow you to actually buy and withdraw cryptocurrencies but this only happens if you don't use the eToro leverage. After that, you need to transfer it from the platform to their wallet and then you can then send it to an external wallet. If you use leverage, the asset is trade as CFD (contract for difference),