EToro buys crypto wallet provider Zengo in $70m deal

EToro Group Ltd., a Tel Aviv, Israel-based trading and investment platform, has agreed to buy Zengo, a crypto wallet provider.

The company plans to add more decentralized finance tools for its users.

EToro CEO Yoni Assia said the deal would support products such as prediction markets, perpetual futures, lending, and connectivity to tokenized assets.

A person familiar with the matter said the transaction is worth about US$70 million, mostly in cash, though Assia declined to comment on the value.

EToro said in September it would pursue larger acquisitions to add asset classes and expand geographically.

The company ended last year with about US$1.3 billion in cash and cash equivalents after raising nearly US$620 million in its May IPO.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

The deal helps eToro compete in prediction markets

eToro’s acquisition of Zengo tracks the rise of prediction markets, a fast-growing revenue source for retail trading platforms 1.
Rivals are expanding quickly. Robinhood’s prediction markets unit is on pace for an estimated $300 million annual revenue run rate, while Crypto.com and Webull have launched similar products 1.
Zengo adds a mature non-custodial wallet (a crypto wallet that lets users control their own assets rather than handing custody to a platform), which eToro can use to move faster in this segment 1.

Wallets connect regulated trading apps with decentralized finance

The acquisition fits a wider shift. Regulated trading platforms such as eToro are using non-custodial wallets to reach Web3 and decentralized finance (DeFi) services 2.
eToro says Zengo’s Web3 wallet features are not regulated activities and sit outside eToro’s core licensed business 2.
The setup lets eToro offer access to decentralized products while putting responsibility for dealing with third-party protocols (software systems that run crypto-based financial services) on the user 2.
Zengo relies on multi-party computation (MPC), a security method that removes the need for a single recovery phrase. eToro is betting this lowers a long-standing hurdle to self-custody, where users hold their own crypto assets 2.