eToro’s Q2 crypto income soared by 23 times compared to last year

eToro, the investment platform set to go public at a $10.4 billion valuation, saw income derived from charging commissions on crypto trades balloon in the second quarter.  

eToro’s latest quarterly results for Q2 2021, announced on August 25, show that crypto trades were responsible for 73% of the commissions charged by the platform in the period. Crypto accounted for just 7% of commissions in Q2 the previous year.

A total of around $362 million in commissions were charged in the second quarter, up from roughly $161 million overall in the same period last year. That equates to $264 million in crypto commissions, some 23 times larger than the $11.27 million in crypto-linked charges in Q2 2020.

A breakdown of the top cryptocurrencies traded through eToro shows that a wide array of tokens contributed to the frenzy. BTC, for instance, accounted for just 7% of total crypto commissions — less than half the contributions of ETH, ADA, and XRP and even less than DOGE, the meme-currency, which was only added to the platform in May.

“The rise in self-directed investing and eToro’s growth are underpinned by long-term secular trends in investor behavior,” said Yoni Assia, CEO and co-founder of eToro, in a statement. He added that he believes investors want three things from a platform: simple access to investments that include crypto, a good user experience, and financial education tools.

Recording SPAC losses

eToro saw volumes increase in other areas in the second quarter too. Notably, the platform processed 127 million trades in Q2 this year, up from 74 million in the second quarter of 2020.

But despite the surge in trading on eToro in crypto and other asset classes, the company posted negative net income of $89 million in the second quarter. It blames the loss on a non-cash charge of $71 million in stock-based compensation for staff and $36 million in transaction costs related to its upcoming Special Purpose Acquisition Company (SPAC) merger.

The company announced in March that it would merge with FinTech Acquisition Corp. V, the blank cheque company led by Betsy Z. Cohen, founder of The Bancorp.

The SPAC-listing gave eToro a valuation of around $10.4 billion, and included commitments for a $650 million private placement from investors including SoftBank Vision Fund 2, ION Investment Group, Third Point LLC, Fidelity Management & Research Company LLC and Wellington Management.