Chronicle Journal: Finance

eToro says crypto made up 73% of trading commissions in the last quarter, as retail customers dived in

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Crypto assets drove 73% of eToro's total trading commissions in the second quarter, compared with 7% a year ago, as interest in digital assets rose and retail investors carried out more trades.

That lift in customer engagement with cryptoassets is driving strong positive momentum for eToro, the trading platform provider said in a quarterly financial update published Wednesday.

The company booked $264 million in trading commissions from crypto, up 2,259% from $11.2 million in the same quarter in 2020. For all assets — stocks, commodities and currencies, as well as crypto — the total was $362 million, a 125% increase on $161 million last year.

A year earlier, crypto activity accounted for only 7% of eToro's trading commissions, with equities and commodities leading instead.

"Cryptoassets drove total commissions in the second quarter of 2021, reflecting retail investors' strong interest across the cryptos offered by eToro with the highest trading volumes in BTC, XRP, ETH, ADA and DOGE," the company's CEO Yoni Assia said in a letter to investors.

The platform added 2.6 million new registered users in the quarter, compared with 1.2 million a year ago. Alongside that came a surge in overall trading volume, with eToro executing 127 million trades in the second quarter, up 72% from 74 million a year ago.

Trading by retail investors is seen as rising in the wake of the COVID-19 outbreak, as people kept indoors by lockdowns adopted new habits.

Assia credited the growth in commissions on the revival in crypto that pushed prices to all-time highs, as well as on unprecedented pandemic-driven market volatility, among other factors over the past 12 months.

In that time, cryptocurrencies have been buffeted by China's crackdown and concerns over the environmental impact of mining, pulling prices back. They recovered sharply in July, with bitcoin recently reclaiming the key $50,000 level.

"We have seen a pattern over time, with increased trading activity in a particular asset class or market influencing eToro's total commission in quarters or years," Assia wrote.

"The rise in self-directed investing is a trend that is here to stay and eToro's growth is underpinned by long-term secular trends in investor behavior," he added.

While bitcoin was the most traded single cryptocurrency, at 20% of volume, it only accounted for 7% of commissions. Ripple's XRP token, ether, and Cardano's ada logged commission share in the 14-16% range, and volume share in the 11-15% range.

In recent months, eToro has added 10 crypto coins to its trading platform, bringing the total offered to 29. It began by offering bitcoin trading in 2013, before adding ether and XRP in 2017, and dogecoin more recently.

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