Binary options trading has quickly become one of the most popular types of trading nowadays. People are attracted to it because it is fast and easy and there are hundreds of brokers online who offer their services to the traders, so they can place their trades from the home computer or mobile phone. Binary options are rock stars of the trading industry, but many are concerned if binary options are legal in Europe or the USA, or in any other country of residence where binary options are legal.
Trading binary options has been around for many years and is better known as digital options. Throughout history, the trading was done as an over the counter transaction and there was not much regulation. Today, more and more countries decide to legalize, but also to regulate it for public’s safety.
Transparency and Regulation
The only reason binary options can exist is due to the transparency of the prices and the fact it’s being regulated through regulatory bodies. In each Broker Review traders will find where the broker is being regulated.
When traders decide to open a binary options trading account with a binary broker, they will discover that broker usually asks for proof of identity. This way brokers respect regulatory framework, such as America’s Patriot Act from October 26, 2001, that is meant to prevent terrorism, fraud and regulate international transactions. By regulating binary brokers, regulatory bodies created a better trading environment and prevented many scams. Some traders find this step annoying but keep in mind that it is created for trader’s safety as well. Certain steps are making money laundering less possible, as well as the chances that someone else is using trader’s card. Additional steps and security checks are a sign of a serious broker.
Brokers are usually asking for:
- a copy of identification document (such as ID or passport)
- a copy of a utility bill that serves as proof of residence
Are Binary Options Legal in the EU?
Europeans shouldn’t be worried about the legality of binary options, as they are legal in most countries of the EU. Brokers who operate in the EU countries are usually regulated by CySEC, but can get their license from another regulatory body such as AMF (France) or CONSOB (Italy), or any other local binary options regulator. When a broker is regulated it means that it is obligated to act in accordance to the laws of the state they are regulated in. This means that it is completely legal to trade binary options in most countries that are part of European Union, and traders should not be afraid that they will get prosecuted. We always advise trading with registered brokers from out top brokers list, and to check about legality of binary options in your country.
Regulated CySEC brokers are, among others
Are Binary Options Legal in the USA?
Binary options are legal in the US, too, but there are some limitations. US traders can legally trade only via three platforms: NADEX, CME or Cantor Exchange. From the three exchanges mentioned, NADEX is the most popular as it has a great trading interface and investing possibilities. The user-friendly approach, as well as the easy to understand terms and conditions have made this exchange extremely popular among the US citizens. NADEX also offers a variety of binary options types, including spreads, so trading on this binary exchange is always interesting, fun and allows better money management. Read full NADEX review.
Trading with unregulated brokers is considered illegal, but the state will prosecute only the broker who is accepting US citizens and not the trader. The CBOE, Chicago Board Options Exchange, was established in 1973 and provided a platform that could be used to trade options on. Later on these over the counter operations became regulated by OCC, Options Clearing Corporation, to ensure that traders were actually sticking to their word and buying and selling what they announced they would. Anyone who did not obey the rules could get a temporary or lifetime ban.
In 2007, the OCC suggested a change of rules that would allow trading binary options on the major markets. The rule was signed into law in 2008 after being approved by the SEC. The American Stock Exchange began to list binary options as the first stock exchange in the world. This happened in May 2008 and in June of the same year CBOE began listing binary options as well.
For US traders, we always suggest trading with Nadex, as they offer the most variety of all US platforms.
Binary Options in Hawaii, Washington and Nevada
USA regulatory framework is quite clear when it comes to binary options. Unlike in Canada, where every province has a specific regulatory framework, in the USA the binary industry regulation is unified. It doesn’t matter if the binary trader is a resident of Hawaii, Texas, New York or Nevada – the rules of the game are all the same for all.
CFTC license is valid in the entire USA area. This may seem similar to the CySEC certification that is valid in the EU states. However, states in the USA don’t have an additional regulatory framework like states in the EU do. For example, in France traders should always rather give an advantage to AMF regulated brokers, than to CySEC regulated broker. In the United States, there are no additional regulations like that on a local level.
For this reason, it is important to understand that CFTC regulation is of great importance. Traders can see it as a seal of guarantee no matter where they are. NADEX is one of the binary exchanges regulated by CFTC and it allows traders to place their investments safely.
Is Binary Options Trading Legal in Canada?
And what about Canada? Are binary options legal in Canada? Well, we could say that they are a grey area of trading. There is no law stating that binary options trading is illegal, but there is also no law that is regulating them specifically. Brokers can get registered in Canada, but many choose not to do so, as regulation is quite complicated in Canada because of a number of territories and provinces. We can say that being a trader in binary options is completely legal, and Canadians can trade with regulated and offshore brokers. Canadian traders should trade with reputable brokers who accept worldwide customers,
Try some of our trusted brokers:
Is Binary Options Trading Legal in South Africa
In South Africa, binary options are among most popular types of trading. They are defined as ‘derivative instruments’ by Securities Services Act of 2004. Even though there is a definition of binary options, they are not completely regulated. Companies located in South Africa are not allowed to offer their services to SA citizens as this grey area is not completely regulated, but the traders can choose any broker outside South Africa. We would recommend trading with one of the brokers from our top brokers list like
Binary Options Legal in Australia
Australian traders will be happy to know that after a few years of waiting, the Australian government decided to regulate binary options which make them completely legal and safe. Australian Securities and Investment Commission is a regulatory body that gives licenses to the brokers. Even though trading with a broker that are not regulated in Australia is not illegal, it is not recommended. Australian customers can choose reliable broker under the name HighLow .
Are Binary Options legal in the UK?
In the time of writing this article, the status of binary options in the UK was unclear. Binary options are not illegal in any way but are not completely regulated, as during writing this article, there was a transitional period when binary options stopped being regulated by Gambling Act and started being under Financial Conduct Authority’s legislation. The final decision who will regulate binary options can be expected during 2016. As binary options are not illegal but are only in the transitional period of their regulation, we recommend trading with brokers who are regulated by FCA like
They will give traders the opportunity for safe trading.
Is Binary Options Trading Legal in Singapore?
This city-state was quite interesting when it comes to binary options trading. Only recently has it become legal in all 10 districts, and not only 6. Binary options are now legal in the entire state of Singapore and are regulated by Monetary Authority of Singapore. The only regulated broker we could find was IG Market Singapore, but traders can trade with offshore brokers as well, as it is not illegal. We recommend our top brokers like