Are Binary Options legal or not The Deffinitive Answer

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When searching for the keywords ‘binary options’, you often find articles with the title ‘Binary Options is Gambling’ or ‘Are binary options even legal?’.

Some of these articles even say that the binary options brokers are scam. How comes?

What are binary options?

Binary Options are very simple to understand, this is why there are some many people with no prior experience, who try their luck with binaries. Most of the time you have a ‘high-low’ options also called ‘call-put’. You basically have to invest your money on the predicted market direction.

There is an expiry date and there is a strike price: this is the price at the moment of the purchase of the option.

Lets say you pick the USD/EUR pair. If you think that the USD will increase compared to the EUR, the you buy a ‘put’. If you think the EUR will increase then you buy a ‘call’. When the option expires, the current price will be compared to the strike price, and this will decide the outcome.

Why are binary options sometimes considered scam?

Unfortunately, like in every market, there are black sheep in the industry. These are usually new companies that are around for a few weeks and then disappear.

Be assured that we only recommend regulated and trustworthy brokers that have been around for some time. Most of these brokers are authorized by CYSEC.

Another possible reason why binary options is considered scam, is that some brokers promise too much. It’s true that you can make a lot of money, in very short time and while this is very true with binary options, you should also know that you can lose a lot of money in short time. So be very careful when making your first trade.

Most articles are outdated

One of the best examples is the binary options article on Forbes written by Gordon Pape, with the title ‘Don’t Gamble On Binary Options’. You can find a great article on binary options on Invezz.

Even though Forbes is a very respected website, it does contain some outdated information, which should be updated as soon as possible. Mr. Pape talks about the brokers not being regulated, but in reality the brokers have been regulated for years by agencies like CySec. That article was written obviously before the regulations started.

Pape also circumcises the way brokers earn their commission. Binary brokers do take a commission on the trades, otherwise it wouldn’t be worth it to build such complex platforms for users if it was free. The commission structure is similar to online poker, which could be another reason why binary trading is often considered gambling. In the end it’s up to the user if he wants to risk his money or not.

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  • Binarium
    Binarium

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  • Binomo
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Answering Binary Options Legality Questions

We’re going to do something different here –

Instead of trying to break down laws and whatnot for binary options in each of the major countries, we thought it’d be better to answer common (legal) questions we found on sites like Quora.com, Yahoo Answers and the more popular forums.

All the following questions and answers revolve around the legality of binary options trading worldwide.

Let’s get started.

Are there legal binary options brokers in Canada, UK, USA, Australia, India, and South Africa?

Yes, because most of these countries have regulatory bodies who oversee the binary options brokers they register and give licensing to. That includes the UK, Australia, US and South Africa.

India also happens to have a regulatory body – the Securities and Exchange Board of India (SEBI). But they do not have any licensed brokers. If they did it would be okay, though.

And that leaves Canada. Canada doesn’t have native brokers, nor do they license or regulate binary trading. But, from what I understand, it’s not illegal.

Are binary options legal?

For traders I don’t know of a country who has outlawed binary options trading. Even though it is no different than gambling and many states and countries have outlawed casino games on some level.

It’s more black and white for brokers. Most countries have some kind of financial regulatory body who licenses, regulates and oversees financial-related companies.

But not every country has decided to regulate binary options. The United States is a good example, which is there aren’t any legal “brokers.” There is an exchange, though – Nadex. They are a licensed and regulated financial company.

Can traders be jailed, fines or prosecuted by the government for committing a crime?

For committing any crime – an actual crime? Yes.

For binary options? The answer isn’t so clear.

Trading isn’t considered illegal, to the best of my knowledge/research.

However, if you run a binary options platform without licensing or blatantly rip off your customers, then I think you could face some serious consequences.

Do you have any legal recourse in case something goes wrong?

The best thing you can do is contact a lawyer. They would have a better idea of what your options are.

That said – if you traded at a regulated and licensed broker I do imagine you’d have options. That’s one of the ‘perks.’

If you traded at an unregulated broker, though, I’d say your chances are slim as they’re probably in a different jurisdiction than you, which makes it MUCH HARDER to take legal action.

Is it legal to launch your own binary options platform?

I’m sure it is (but you’re better off asking a lawyer).

I think a better question is if it’s legal to operate a binary options platform/business in your country or state. Do they license and regulate binary options in the country you plan to accept traders from?

Is it legal to operate a binary options website?

Yes. As far as I know there’s nothing unlawful about running a website about binary options or receiving money in exchange for advertisements or for sending leads.

Do you have to pay taxes on your winnings?

In the US – I would say yes, only because I know you have to pay taxes on any gambling winnings over $500-$600. And I’m pretty sure the US government wants a piece of any money you make, no matter where it comes from.

Elsewhere – from what I understand you don’t have to pay taxes on that stuff in the UK / Europe. But it sounds like you’d have to pay taxes in Canada.

The best thing to do is keep records of the money you spend and the money you make. Then contact a lawyer and/or accountant for advice.

Are there any brokers known for breaking the law?

One that comes to mind is Banc De Binary. Back when they first launched they accepted American traders.

But in 2020 they were barred from the US and charged on several offences from the CFTC and SEC for not having a license first. They have yet to appear in court.

They do have a license from CySEC, but that didn’t stop CySEC from finding them 10k Euros after they found out Banc De Binary was withholding information.

That’s just one example – I’m sure there are plenty of others.

Is Nadex a legal broker for Americans?

They’re licensed and regulated by the CFTC. They get away with it because they’re technically not a broker, but instead an exchange.

Here’s what that means:

The main difference between Nadex (North American Derivatives Exchange) and the plethora of unregulated offshore companies which are offering binary options trading, is that the trades on Nadex are executed on an exchange at a price that the client sets.

The company is not taking the other side of the trade and is delivering the most transparent product available on the binary options market today. As an exchange, Nadex doesn’t have any interest in who the profitable party in a trade is, hence there is no conflict of interest between the client and the company.

Does legal mean a broker is safe?

This is an interesting question. I found a good answer on Quora.com.

Not really and here’s why:

There is a big difference between legal and regulated. Some countries don’t have many, if any restrictions or laws for people who want to run these sorts of businesses.

It reminds me of the sportsbook industry – I think it’s Cuba that doesn’t force sportsbooks to be licensed or regulated. There are no rules they have to follow. But it’s legal to operate a sportsbook from there.

And yet, it’s no surprise that’s where many of the largest sportsbook scams have originated.

So instead of focusing on legal, focus on regulated. Because a regulated broker is going to have standards to meet. They’ll have to have separate bank accounts, lots of cash flow and resources before they can even get their license.

It’s a much better way to be sure you’ll be safe trading online.

7 Binary Options

A lot of people are skeptical of trading binary options because it is done online; people tend to always be more skeptical when it comes to something that deals with money and it’s not done face to face. But everyone can rest assured that not only is a binary options trading very legal, but it is also regulated in most cases.

The question to ask is who is the regulatory body, is it the CySEC, the CFTC or ASIC. Is the binary website operating as an online broker or is it an actual exchange like Nadex. Still some people are not convinced of its legality and others have accused it of being like gambling because of the short time frames that binary options are sometimes traded on. The fact is, binary options trading has been in existence since 2008 and there are hundreds of thousands of traders that practice it; with that many people involved with it, you would surely hear more about it if it was an illegal venture.

Even in cases where a website may not fall under any regulation, it will still be watched by such agencies as the US Securities and Exchange Commission and not allowed in their country if they do not condone how a site conducts its trading. So every online broker is regulated, even if it is not always done in a formal way.

Some people also associate any activity that has a chance of someone losing money as a practice that may be illegal; there is risk involved when a person invests in binary options and it’s no different than any other type of investing in that respect. Since binary options are traded online, it makes people more suspicious of them.

Binary option trading has done some good things for potential investors too; it has opened up the option to trade for many investors who saw other forms of market investment as being too hard and too complicated to understand and trade. Binary option trading is certainly much simpler to understand and place trades than other types of market trading.

Online brokers are allowed to operate only in certain countries. They are subject to rules and permissions in different countries and different parts of the world and there is a wide variety of terms they are required to work under. Almost every country has its own distinct opinion of how they need to operate.

More often these days a trader will see regulating agencies pop up in different areas of the world. The most prominent of these is the Cypress based CySEC; it is starting to be recognized as a trustworthy regulating body as far as binary option trading.

As these regulatory agencies start to standardize the guidelines that binary option trading is done under, people will become less skeptical about it and take advantage more of all it has to offer investors.

Start trading now by opening a FREE account on one of our recommended brokers.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
    Perfect Choice For Beginners and Middle-Level Traders!
    Free Demo Account! Free Education!

  • Binomo
    Binomo

    Honest broker!

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