Is eToro Safe? Here’s What You Should Know In 2021
First concern for people starting investing their money in the Forex markets is how safe it is to be considered their broker.
That’s a concern that regards even top tier brokers such as eToro, which is quite a safe behaviour all things considered. We should always investigate every issue which may pop-out before investing in anything that can take a considerable amount of money and time.
So, is eToro safe?
Quick answer is: yes, it is safe. And here’s all the reasons why we should consider eToro a safe broker.
eToro’s Regulation and Licenses
One of the main reasons why eToro is considered worldwide as a safe brokerage service is because of their well-regulated entities which may be found all across many continents.
As of today, eToro brokering services are provided by:
- CySEC: the Cyprus Securities and Exchange Commission (CySEC) is a financial regulatory agency of Cyprus. It authorizes and regulates eToro (Europe) Ltd. services in the European Union.
- ASIC: the Australian Financial Services Licence (ASIC) is a financial regulatory agency of Australia. It authorizes and regulates eToro AUS Capital Pty Ltd. services in the country.
- FCA: the Financial Conduct Authority (FCA) is a financial regulatory agency of Great Britain. It authorize and regulate eToro (UK) Ltd. services in the United Kingdom
- FinCEN: the Financial Crimes Enforcement Network (FinCEN) is a financial regulatory agency of the US. It authorizes and regulates eToro (USA) LLC. as a Money Services Business in the States.
You should always remember that, if a trader chooses to put his money in the hands of a non-regulated broker, it will eventually lose them or, even worse, get in problems with the authorities.
Segregated Funds & Negative Balance Protection
In order to upgrade their traders fund protection, eToro decided to implement a segregated funds system for all their clients.
This choice prevents the possibility of mixing traders funds with eToro funds, which may end in a financial problem or even disaster in the unlikely situation of the broker being bankrupt. In that case, liquidators would not be able to take any money from clients funds, which may be the case instead if the funds would be mixed once deposited.
As a matter of fact, traders funds are divided between top banks worldwide thanks to the segregated funds and cannot be touched for any reason: only traders can have them at their disposal.
At the same time, eToro empowered their traders funds with many other protections, including the well-known negative balance protection. Thanks to it, there will be no chance of going red and eToro will close any position opened by your account that is going down below 0.
Personal Data Protection
Everybody is concerned about money, but many people are also worried about personal data and privacy protection.
As every brokering service, eToro is required to collect your personal data in order to fight money laundering and comply with the aforementioned financial regulatory bodies. And just like banks and other financial institutions, they may collect other data such as:
- Your location
- Your Log information
- Your Device ID
- Your On-site activity
- Your eToro wallet activity
It goes without saying that all this personal data gathered by eToro will be kept secure by the group and shared to nobody, but a few exceptions.
Those information may be than shared with:
- Within the eToro group
- With your bank or other form of financial institutions
- Within the authorities in case of a serious request or an investigation
Remember also that in order to withdraw your funds you will be required to give a proof of identity (POI) like a passport, and a proof of address (POA) such as a bank statement or a bill.