eToroX Review – A Beginner’s Guide
By: Ofir Beigel | Last updated: 11/8/23
eToroX is a regulated cryptocurrency exchange that supplies a variety of coins for institutional crypto investors. In this post, I’ll review the exchange, its supported currencies, and what you have to be aware of before signing up.
eToroX Review Summary
eToroX is an advanced cryptocurrency exchange that supports stablecoins instead of fiat currencies for most of its trading pairs, with USD being the only supported fiat currency. Stablecoins are issued and backed by eToro, which, in my opinion, creates a systematic risk for traders.
Whereas the platform originally catered to all customers, including retail, eToroX now serves institutional investors only.
Overall, the exchange displays a huge leap forward in cryptocurrency adoption but is not without risk. That’s eToroX in a nutshell. If you want a more detailed review, keep on reading. Here’s what I’ll cover:
- Company Overview
- eToroX Services
- Currencies and Payment Methods
- Supported Countries
- Stablecoin Caveats
eToro’s founder and CEO, Yoni Assia, is a prominent figure in the cryptocurrency community. The company is headquartered in Tel Aviv, Israel, and employs over 2000 people.
The eToro Money app, formerly called eToro Wallet, used to be a crypto-only wallet that has evolved into a complete cash management app. It is available for iOS and Android and offers the following features:
- Transfer of crypto assets from the eToro trading platform.
- Withdrawal of fiat currency from your eToro investment account balance.
- For crypto assets to be sent and received from other wallets.
- For crypto assets to be converted into other crypto assets.
- Buy crypto assets within the eToro Money app
- Get an eToro debit card to spend your money anywhere.
The eToro Money crypto wallet is a custodial wallet, meaning you don’t have access to its private keys or full control of your funds. In the end, it’s eToro that controls your funds.
You’ll need to log into your wallet with your eToro account credentials. However, the wallet does not reflect the same balance that you have on the eToro Trading Platform since it is a separate, complementary product.
At the moment, the wallet supports deposits for:
You can transfer, send, receive, buy, and convert Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Stellar, and XRP from within the eToro Money crypto wallet, whilst you can only transfer, send, and receive Tron and Cardano from the eToro Money crypto wallet.
The eToroX exchange is a regulated and licensed cryptocurrency exchange. In order to use it, you’ll need a verified eToro account – this can be done through eToroX or etoro.com. eToroX allows you to trade different cryptocurrencies and eToro stablecoins.
There are no charges on crypto deposits to eToroX. There are also no fees for buying or selling USD using SIGNET.
As far as trading fees go, eToroX charges a default rate of 5bps (0.05%) for all clients, regardless of what your weekly or monthly trading volume is.
Like most exchanges, eToroX also has a maker-taker model, with makers being people who add limit orders to the order book and takers being people who fulfill existing orders from the order book. What is unique about eToroX’s implementation of this model is that they have inverted the model so that takers are charged a lower fee or paid a rebate for removing liquidity from the market.
Withdrawals have a fee that differs depending on which coins you’re withdrawing. There is also a quick withdrawal limit of 10k USD per 24 hours; transactions over this limit will be screened for approval, which can take anywhere from 24 to 72 hours, depending on when you initiate the withdrawal. You can view the complete fee schedule here.
eToroX supports more than 85 cryptocurrencies, including:
- Binance Coin
- Bitcoin Cash
- Ethereum Classic
- USD Coin
The exchange recently started supporting USD deposits, and in order to deposit USD, you must have a verified eToro trading account. You must also enable 2-factor authentication on your eToroX account.
On eToroX, you can trade cryptocurrencies against eToroX’s stablecoins or against USD. There are 9 different stablecoin tokens available on eToroX:
- EURX (pegged to the Euro) | Total supply: 1,000,000
- GBPX (pegged to the British Pound) | Total supply: 500,000
- JPYX (pegged to the Japanese Yen) | Total supply: 56,000,000
- CADX (pegged to the Canadian Dollar) | Total supply: 500,000
- AUDX (pegged to the Australian Dollar) | Total supply: 500,000
- NZDX (pegged to the New Zealand Dollar) | Total supply: 500,000
- CHFX (pegged to the Swiss Franc) | Total supply: 500,000
- GLDX (pegged to gold) | Total supply: 390
- SLVX (pegged to silver) | Total supply: 33,700
Keep in mind that the total supply of each stablecoin can change in the future through minting by eToro.
How do eToro stablecoins work?
eToro Digital Assets Ltd. (another eToro subsidiary) issues ERC-20 tokens (i.e., Ethereum tokens) that represent fiat currency. For example, EURX is a digital token that strives to maintain the value of 1 EUR, CADX strives to maintain the value of 1 CAD, and so on.
How is their value maintained?
Well, eToro Ltd. (the parent company) acts as a market maker. This means that eToro Ltd. is like a central bank, buying and selling eToro stablecoins on the eToroX exchange in order to maintain the peg to the desired value.
A complete breakdown of these tokens, their whitepaper, and important risk warnings can be found here. For now, here’s a quick summary of the main risk warnings:
The value of these tokens may fall below their peg under extreme market conditions. If that’s the case, there’s not much you can do about it. There’s no way to redeem these stablecoins for the asset they represent or have any claim against eToro.
The eToroX Exchange currently supports the following countries:
Andorra, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Belgium, Bermuda, Bolivia, Brazil, Bulgaria, Cameroon, Cayman Islands, Colombia, Chile, Croatia, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, Faeroe Islands, Finland, Guatemala, Germany, Gibraltar, Greece, Greenland, Guernsey, Hong Kong, Hungary, Iceland, Ireland, Israel, Isle of Man, Italy, India, Jersey Island, Kazakhstan, Kenya, Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Macau, Malaysia, Maldives, Malta, Mexico, Monaco, Morocco,, New Zealand, Norway, Oman, Peru, Philippines, Poland, Portugal, Romania, Saint Barthelemy, Saint Lucia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Vietnam, Virgin Islands
I think stablecoins are a great idea. However, in essence, they pose a certain risk. Mainly if the peg of the stablecoin breaks. When the market is calm, a peg is relatively easy to maintain. However, sometimes events can happen that will break the peg.
The worst case of a stablecoin breaking its peg was in 2022 when TerraUSD (UST) broke its 1 USD peg several times in the span of a few hours and eventually collapsed – going from $1 to less than 3 cents in a matter of days.
Maintaining a peg isn’t a simple task, even for fiat currencies.
Some well-known examples where pegs were broken are the Swiss Franc peg to the Euro in 2015, the Chinese Yuan to the US dollar in 2005, the Thai Baht peg to the US dollar in 1997, and the most famous of them all, the gold standard – pegging the US dollar to gold in 1971.
For an in-depth explanation of Stablecoins, watch this video:
Moving on to eToroX stablecoins, it’s important to read through eToro’s risk warnings and transparency documentation. The process of issuing eToro stablecoins can be boiled down to this:
eToro creates their own tokens and lists them on their platform. These tokens are then sold to consumers in exchange for major cryptocurrencies like Bitcoin and Ethereum, while eToro maintains the peg through additional counter transactions.
There are several caveats that are important to be aware of before using eToroX stablecoins. I’ll try to sum them up in plain English. Note that the below statements are all taken straight from the different eToro websites:
What are the eToroX tokens actually worth?
Token holders will only be able to sell their tokens if there is someone willing to buy their tokens…
In normal market conditions, the Market Maker will seek to make offers to buy tokens through eToroX, but it is not obliged to buy tokens from token holders.
Abnormal market conditions are a prescribed set of exceptional circumstances in which the Market Maker is not obliged to make offers to buy and sell the tokens through eToroX.
Abnormal Market Conditions broadly include the following circumstances: (a) extreme volatility impacting the majority of our tokenized assets or their underlying;
If a tokenholder cannot sell their tokens, they will not be able to recover any capital they have invested in the tokens…
This basically means that there’s no guarantee an eToroX token will be worth something. If the market becomes too volatile, eToro does not guarantee it can buy them back from you.
Do I have any recourse in the case that the value of my tokens drops?
Tokenholders have no right to enforce the obligation to make a market in the tokens against the Market Maker….
The tokens are not regulated instruments….. token holders will not be clients of the Market Maker, meaning they will not benefit from protections afforded to clients of the Market Maker.
The tokens do not give token holders any rights in relation to the underlying asset
Token holders do not have the right to redeem their tokens against any eToro entity.
This means that you will not be able to pursue any legal action against eToro or demand the actual asset represented by the stablecoin in case your token value drops. In other words, at this current stage, you won’t be able to redeem EURX for actual Euros, unlike some other stablecoins like USDC or GUSD that do allow you to redeem 1 USD for 1 USDC/GUSD.
To sum it up, contrary to what many people think, stablecoins can become a risky business. This is true not just for eToroX tokens but for Tether, USDC, GUSD, and other popular stablecoins.
However, the main difference between these more established stablecoins and eToroX tokens is that they are already openly traded on other markets. While this will hopefully happen to eToroX’s tokens as well, that’s not the case at the moment, leaving a lot of power in eToro’s hands.
eToroX is definitely a revolutionary cryptocurrency exchange, which, unfortunately, has now excluded retail customers. I also think it’s important to separate the platform itself from the specific eToro stablecoins.
At the moment, eToroX utilizes tokens that simulate fiat currencies (i.e., stablecoins). This entails a risk for traders that the value of these tokens may not be sustainable.
While this is true not just for eToroX tokens but for all stablecoins, most exchanges today use more popular stablecoins like USDT, USDC, or GUSD that are listed outside of the issuing exchange as well. eToroX tokens are created, controlled, and traded solely through eToro.
On the other hand, eToro chose to create their own stablecoins that have yet to reach market adoption and can be traded only on eToroX.
Will they succeed? Only time will tell.
While I have faith in eToro as a platform, I would avoid storing a lot of value in stablecoins for long periods of time, and I would mainly use them for pinpointed trading purposes.
Have you used eToroX yourself? I’d love to hear about it in the comment section below.
Wallet and Exchange services are provided by eToro X Limited (‘eToro X’), a limited liability company incorporated in Gibraltar with company number 116348 and with its registered office at 57/63 Line Wall Road, Gibraltar. eToro X is a regulated DLT provider licensed by the Gibraltar Financial Services Commission under the Investments and Financial Fiduciary Services Act with license number FSC1333B.