eToro reported a 38% year-over-year decline in crypto asset revenue during Q1 2026, falling to $2.15 billion, yet CEO Yoni Assia signaled confidence in a bullish reversal later this year as the platform activated its New York BitLicense and closed its $70 million acquisition of self-custodial wallet provider Zengo. The earnings release on May 13 revealed the depth of retail crypto weakness in early 2026, with net trading income from crypto derivatives plummeting 57% to $33.4 million. Despite the contraction, eToro’s overall net income rose 37% to $82.4 million, cushioned by gains in traditional asset trading.
Crypto Trading Collapsed Across Q1 and April
eToro’s crypto business faced sustained headwinds throughout the first quarter and into April. Crypto trades declined 32% year-over-year in April alone, while the average invested amount per trade fell 22%. These metrics reflect broader retail investor reticence during a period of crypto market volatility. The decline extended the weakness that began in late 2025, signaling that seasonal rallies and technical recovery patterns failed to reignite retail participation on the platform.
BitLicense Activation Opens New York Market Access
The activation of eToro’s BitLicense on May 13 marks a three-year regulatory milestone. The license grants eToro full operational approval to serve New York-based traders, a market eToro has sought to access directly rather than through limited partnerships. BitLicense holders in New York face strict capital, cybersecurity, and consumer protection requirements. The timing positions eToro to capture retail volume if crypto prices recover, though the platform has not disclosed revenue projections tied to New York operations or timeline expectations for monetizing the license.
Zengo Acquisition Signals Self-Custody Shift
The $70 million acquisition of Zengo, completed April 30, represents a strategic pivot toward on-chain infrastructure. Assia stated the deal “meaningfully advances our strategy of bridging traditional finance with on-chain infrastructure, prediction markets, perpetuals and the broader crypto ecosystem.” Zengo’s self-custodial wallet technology allows users to hold crypto directly rather than relying on exchange custody. This move positions eToro to compete with platforms like Coinbase, which has expanded self-custody offerings, and signals confidence that institutional and retail demand for non-custodial solutions will grow as crypto adoption deepens.
Assia’s Bullish Stance Hinges on Price Recovery
Despite Q1 weakness, Assia told CNBC: “We do expect later this year to start seeing crypto rising back to, you know, near all-time-highs and that will drive crypto engagement.” His outlook rests on price appreciation rather than product innovation or user acquisition metrics. If crypto fails to recover to near-all-time-high levels in the remainder of 2026, eToro’s ability to reignite retail participation through BitLicense and Zengo integration remains untested.
