eToro's $620 million Nasdaq listing was built on a product US traders cannot use

The roughly $620 million offering that put eToro (ETOR) on the Nasdaq at $52 in May 2025 relied heavily on revenue from contracts for difference, an instrument its American customers are not permitted to trade. CFDs are the dominant leveraged product across Europe, Australia, and much of Asia. European regulators have documented that between 74% and 89% of retail CFD accounts lose money, a figure that explains both the instrument's global reach and the logic behind American restrictions.

How a contract for difference settles

A CFD is an agreement between a trader and a broker to exchange the cash difference in an asset's price from open to close. No ownership of the underlying stock, currency, commodity, or index changes hands. The trader takes a direction: long to profit from a rising price, short to profit from a falling one.

Margin makes the position work. A position on 10 ounces of gold at $2,400 an ounce represents $24,000 in notional value, yet the broker may ask for only 5% or 10% as a deposit. A move to $2,450 returns $500 on that position; a move to $2,350 costs $500. Gains and losses are both calculated against the full $24,000, not the deposit.

What the trade actually costs

The spread, the gap between the buy price and the sell price, is baked into nearly every CFD. Share CFDs sometimes add a separate commission layer. Any position held past the daily cutoff accrues an overnight funding charge, the cost of carrying a leveraged trade beyond settlement. Those fees make holding a CFD for weeks or months expensive by design.

Why Dodd-Frank ended US retail access

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 in response to the 2008 financial crisis, bringing over-the-counter derivatives under SEC and CFTC oversight. Under those rules, CFDs can be classified as swaps or security-based swaps, and offering them to retail investors requires the trade to clear on a registered US exchange. Almost every CFD globally trades over the counter, directly between broker and client, making that single requirement a practical ban. Most offshore CFD brokers respond by refusing to open accounts for US residents.

eToro addresses this by running a separate product set for American users: stocks, options, and crypto, rather than the multi-asset CFD platform it operates internationally.

The regulated alternatives on the US tape

American traders reach leveraged short exposure through futures, which clear through established exchanges such as the CME. Exchange-traded options provide defined-risk exposure to stocks and indexes. Spot forex is available through brokers registered with the National Futures Association.

Futures come closest to replicating CFD mechanics, since both allow long and short positions with margin across a range of markets. The structural difference is price formation: futures prices are set on a central exchange, while CFD prices are set by the broker. Micro contracts now let traders enter futures positions with margin requirements sometimes as low as a few hundred dollars.

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