eToro Targets Onchain Expansion with $70M Zengo Acquisition

eToro has agreed to acquire self-custody wallet provider Zengo for approximately $70 million, marking a strategic pivot to deepen its reach into decentralized finance. The deal integrates Zengo’s multi-party computation (MPC) technology directly into the eToro infrastructure, removing the reliance on traditional seed phrases for user security.

Solving for Retail Friction

The core of the Zengo value proposition lies in its approach to private key management. By utilizing MPC, the firm splits the cryptographic key into separate shares, ensuring that no single point of failure exists while maintaining a non-custodial experience. For eToro, this acquisition is a direct play to onboard retail users who find the current state of self-custody—often involving complex seed phrase management—too intimidating.

Integration of this technology allows eToro to bridge the gap between its existing centralized trading interface and the broader web3 ecosystem. This move mirrors Bybit CEO Ben Zhou: AI and Trust as Future Infrastructure Pillars, where the focus remains on building trust through technical architecture rather than just marketing.

Market Positioning and Onchain Strategy

eToro is betting that the next wave of retail adoption depends on providing institutional-grade security with a consumer-grade user experience. The acquisition signals an aggressive push into onchain finance, positioning the firm to capture volume from users currently utilizing the best crypto brokers for entry, but seeking more autonomy over their assets.

For market participants, the move highlights the ongoing consolidation within the crypto-wallet segment. As platforms like Bitcoin (BTC) profile and Ethereum (ETH) profile become the bedrock of retail portfolios, the battle for the "interface layer" has intensified. Traders should monitor whether this acquisition leads to a broader rollout of decentralized application (dApp) access within the eToro app, which would increase the velocity of assets moving from their exchange into external protocols.

What Traders Are Watching

• User Retention Rates: Whether the reduction in technical barriers leads to higher platform stickiness for crypto-native users.
• Regulatory Compliance: How the integration of Zengo’s MPC tech aligns with evolving mandates, such as the UK FCA Sets 2027 Crypto Rulebook Foundation With New Consultation.
• Market Share Shifts: Potential migration of assets from custodial hot wallets to the new MPC-based solution, which may impact the firm’s internal liquidity pools.

This acquisition places eToro in direct competition with wallet-first providers that have historically dominated the self-custody space. By absorbing Zengo for $70 million, eToro is effectively buying a shortcut to feature parity in the competitive wallet market. Expect further alignment of these services as the platform attempts to convert its massive existing user base into active onchain participants.