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UK-based trading platform eToro launched in the US with its crypto trading platform and crypto asset wallet, per Coindesk.
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Of note, the platform raised $100 million in March 2018 after the firm announced its plans to launch a crypto exchange and wallet and expand in the US. eToro will initially operate in 32 states and only offer crypto assets trading, but the firm plans to add further asset classes in the following 12 months and receive the regulatory sign-offs to expand in additional states.
For context, in its current markets, customers can trade in over 1,500 asset classes and markets, such as cryptos, commodities, stocks, and bonds. The platform also focuses on social networks, as eToro users can see the trading activity and realized returns, as well as copy investments of other users in real time. Further, customers can practice trading with virtual money to build the confidence to invest their own capital.
eToro’s experience and differentiated services could help it succeed in the US, but it should beware of the headwinds that come with expanding into other asset classes. eToro has vast experience in the trading space, having over 10 million users and operating in more than 140 countries.
And while it has to compete with US players such as Robinhood and Coinbase, which have an established presence in the country, its differentiated offerings could make it stand out. According to the company’s CEO Yoni Assia, this will be the first time that “Americans can collaborate with other crypto traders when making buying and selling decisions."
Further, eToro’s CopyPortfolios feature allows investors to own portfolios based on those of the best-performing traders on its platform or on specific market strategies. However, eToro shouldn’t overlook the challenge of securing the necessary licenses to expand its offerings to other asset classes in the fragmented US regulatory space.
Many fintechs have been looking to expand in the US in an effort to attract new clients. European neobanks N26 and Revolut have both announced plans to move to the US in Q1 2019, while UK-based personal finance management chatbot Cleo expanded to the US last year, as examples. As the fintech space gets more crowded, players with the required funds to expand in new markets look to do so in search of tech-savvy consumers that could bolster their customer base.
Similarities in culture, a common language, and a vast population make the US a common choice, despite regulatory challenges for players that require licenses. However, as competition heightens, fintechs should focus on differentiating their propositions and creating sustainable business models to succeed.
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