eToro vs. Coinbase: Which Is Right for You? | The Motley Fool (2024)

eToro and Coinbase are both popular cryptocurrency exchanges that will appeal to different types of traders. In this eToro vs. Coinbase comparison, we take a deep dive into everything from security to available cryptocurrencies and trading fees. Read on to find out which platform will work best for you.

eToro vs. Coinbase: At a glance

Comparing crypto fees can be difficult because each crypto exchange structures its fees differently and they aren't always transparent about what they charge. It's further complicated in this comparison because Coinbase has two platforms, each with different fee structures. Coinbase customers can reduce trading fees significantly by using its Advanced Trade option, which also has more features.

READ MORE: Full Coinbase review

In addition to trading fees, it's worth looking at the costs of depositing and withdrawing fiat currency (traditional money) as well as the costs of buying or selling crypto. Here's how Coinbase and eToro stack up in terms of various crypto fees:

Coinbase's recent efforts to expand its cryptocurrency selection are reflected in the over 210 supported cryptocurrencies on the exchange. Its selection includes almost all the coins in the top 30 by market capitalization, with a couple of exceptions like Binance Coin (BNB) and VeChain (VET). The vast majority of Coinbase cryptos are available to its U.S. customers, though a number cannot be bought in New York.

READ MORE: Full eToro review

eToro lists around 75 cryptos, including a lot of top 30 cryptos. The great thing about eToro is that it also sells other assets such as stocks, including fractional shares, and ETFs. However, its crypto offer is much more restricted for U.S. customers -- only a third of its cryptocurrencies can be bought and sold in the U.S. This won't be a problem if you only want to buy Bitcoin or Ethereum (ETH). But if you live in the U.S. and want to buy, say Cardano (ADA) or Solana (SOL), you'll have to look elsewhere. Check out our list of cryptocurrency availability on each platform.

Some crypto investors don't want to leave their assets on the trading platform and prefer to move funds to a crypto wallet that they control. Both Coinbase and eToro have standalone wallets, but they don't work in the same ways.

Here are the main differences:

• Anybody can open a Coinbase wallet, including non-Coinbase customers. The eToro wallet is only available to eToro customers.
• Coinbase allows users to move money between the wallet and the exchange, though there are some restrictions. eToro only works one way -- once you move coins to the wallet, you can't put them back on the exchange.
• eToro's wallet supports only a handful of cryptos.
• The Coinbase Wallet supports any ERC-20 token (built on the Ethereum network) as well as Bitcoin, Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP), Stellar Lumens (XLM), and Dogecoin (DOGE).

Security is an important consideration when choosing a cryptocurrency exchange. You want to know the people you trust with your investments will actively protect your assets. Both eToro and Coinbase have many of the security features we look for. They both store the majority of assets offline in cold storage, making them harder to hack. They have multi-factor authentication at a user level and participate in bug bounty programs to encourage ethical hackers to uncover any flaws in the system.

In the U.S., if your bank or stock broker fails, you'll likely be protected by FDIC or SIPC insurance. Unfortunately, the crypto industry doesn't have the same built-in protections. Both eToro and Coinbase say money held in U.S. dollars is covered by FDIC insurance for U.S. residents and eToro stock investments are covered by SIPC insurance. However, that coverage doesn't extend to cryptocurrencies.

As a result, it's good to check whether the exchange has its own third-party insurance. Coinbase carries crime insurance to protect cryptocurrency assets against theft, including hacking. Unfortunately, while eToro has additional insurance, it only covers cash, CFD positions, and securities -- not crypto assets.

When you compare eToro vs. Coinbase, they are both solid crypto exchanges. But they shine in different ways and will appeal to different types of investors. The big difference is that eToro is a crypto broker where customers can invest in crypto alongside stocks, ETFs, and other assets. Coinbase is a dedicated crypto exchange with more educational information, more cryptos, and more functionality for crypto investors.

eToro boasts social trading features like copy trading. Copy trading lets clients mirror the trades of top-performing traders. It also has a demo account where people can test out trading strategies without risking any capital.

Coinbase is a great option for first-time cryptocurrency traders, even though its fees are slightly higher on the basic platform. It has excellent educational resources, and its interface is extremely easy to use. It has a wider range of cryptocurrencies, and the way the exchange interacts with the wallet is more flexible.

One additional factor to take into account is that eToro is not available in every U.S. state. Residents of Hawaii, Minnesota, Nevada, and New York won't be able to access eToro. Hawaii is the only state not yet supported by Coinbase.

If neither of them feels right, check out our list of top cryptocurrency apps and exchanges for more recommendations. And don't be afraid to open accounts with more than one crypto exchange. Sometimes the best way to find out which one is right for you is to test them out. Just make sure you know what fees you'll have to pay before you transfer your hard-earned cash.