Why are Binary Options Illegal in Some Jurisdictions

There is not one answer to the question “Are the binary options legal?”. Therefore, it is not particularly easy to give an answer without its further interpretation and explanation. Different countries have the different opinion on this matter. For some it is a welcomed service, for others is equal as gambling and forbidden, but there is one thing that many countries agree on, and that is the regulation of such services. The countries which encourage binary options recommend and work on regulation of companies, providing the safety for the clients if the safety in this financial branch is possible at all. We all should be aware that the only reason binary options can survive is that of the transparency of the prices, and because there are regulatory bodies which are putting these brokers under control.

The regulatory agencies in Europe, the United States as well as other areas where the binary options are legal, work extremely hard to create rules which all the companies need to follow. Through these regulatory steps, the existence of binary options trading services is ensured. This way the possible scams are prevented and the laundering money is less likely as well. These additional steps and security checks are signs that the broker is serious and trustworthy.

Nevertheless, many countries still consider this as gambling and do not approve binary options or CFDs. For example, it is known that the US, most of the countries of the EU as well as the UK, Australia, and South Africa accept binary options trading services, and have specifically designed laws which regulate these companies. The EU laws are particularly strict, but the area is particularly fertile for these kinds of services.

Binary Options Around the World

Take Cyprus, for instance, which counts a great number of companies which operate worldwide. Cyprus has become a center for binary options and Forex licensing. All companies which offer service in Forex or binary options markets should be regulated by the Cyprus Securities and Exchanges Commission (CySEC). This regulatory authority is one of the best and most reliable authorities and the leading regulator of brokers worldwide.

In the US, Forex trading is regulated by the National Futures Association (NFA), and the CFDs are illegal in the USA. Binary options trade is regulated by SEC and CFTC. All the brokers can offer binary options services to traders in the US without the necessary license. Further, the US traders are allowed to use offshore brokers at their risk.

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There are also countries which have not particularly stated their decision on binary options, such as Canada. Canada and such similar countries are a gray area of trading. These countries have no particular law stating that binary options trading is illegal, but there are no laws that specifically regulates them. Brokers are not usually registered in Canada since the regulation is quite complicated in Canada because of many territories and provinces. Being a trader in binary options is legal, and Canadians can trade with brokers worldwide.

In the UK the Forex trading and CFD trading are controlled by the Financial Conduct Authority (FCA), and a broker based in the UK cannot offer services to UK traders if it does not have FCA license. On the other hand, the UK government considers binary options trade to be gambling. Since this is the case, regulation of binary options trading is under the UK Gambling Commission. Even though it is not recommended, UK traders are free to use offshore brokers.

In Australia, it is illegal for brokers without an ASIC license to offer their services to Australian citizens. All the companies which disobey these rules can face serious consequences.

France has a particular situation. Trading in Forex and CFD markets are regulated by L’Autorité des marchés financiers (AMF), meaning they are legal. French citizens can use offshore brokers for as their trading service, even though they are advised not to. On the other hand, binary options brokers are not legal, and should not offer their services to French traders. Furthermore, even advertising binary options are illegal.

Since August 2016 similar case is Belgium. The Belgium authorities always issued warnings against scam companies until they finally decided to ban online trading in binary options, foreign markets as well as CFDs.

However, the Netherlands also decided to follow France’s example. Even though in this country none of these online trades is illegal, they are not advised or recommended in any case. The advertising of these services is not allowed.

Reasons Behind the Banning Policy

There are many reasons that governments around the world decide that online trading possibilities should not be allowed. One of the most common reasons they state is the scam companies which can cause many troubles not only for an individual but the country as well. Many of them believe that no regulatory authority can provide that amount of safety for clients. Besides, manipulations are lately present even in regulated companies, which means that this market indeed offers the possibility for shady companies or shady individuals behind the regulated companies to confirm what the majority was scared of at first.

Whatever the law of your country says, you should be aware that this is in a way gambling. It is not the same, but still, some of the actions are in the hands of pure luck. Be sure to educate yourself and if you want to be a part of the online trading market do it responsibly. Find the good and regulated company which has positive customer reviews and feedbacks. Or simply, protect yourself and find other sources of making the profit.