Are Binary Options Legal?
Welcome to our guide on the legality of binary options trading in various jurisdictions of the world. This website focuses directly on the legal issues facing binary options in each country, and we’ll touch a bit on the history of this trade type as well. This site will also recommend brokers to trade with in each jurisdiction who are compliant with the laws therein. Also, you’ll notice some jurisdictions are almost completely closed, like the USA, yet some brokers still accept traders from there.
Binary options brokers is mostly considered a grey-area legally, primarily because regulatory bodies are yet to step in and offer explicit regulation of the trade in their area. Thus, where there is no regulation, brokers and their lawyers in the binary world take it upon themselves to embrace the lack of law and act as if there was one. It was not until CySEC, the Cyprus securities regulatory body, touched explicitly on this ‘new’ industry that binary was even an option to be regulated anywhere. Yet, you’ll find many brokers today that did not register in CySEC, because they feel a Cyprus license doesn’t give them rest-of-world compliance and they want to avoid oversight by a regulator where there’s potentially no legal benefit.
Binary options are amazingly simple, thus, the binary part of their name. Binary means two options, in computers that is 1 or 0, on or off. In binary options trading, it means up or down. That is, the trader believes the asset in question will go up or will go down in the fixed duration of time allocated until maturity of the trade. That’s pretty simple. The benefit of simple trades like this is that amateur investors can understand, and potentially do well in predicting price movement of assets traded. The downside is that those same investors have no reason whatsoever to believe they can predict price movement in a duration as low as 30 seconds — the lowest we know of, offered today.
Often, binary options firms will lure traders in with promises of very high returns in very short durations of time. This is completely true, but investors must know — and this is where financial regulators are starting to listen — that with high rewards come insanely high risks. If the best traders on wall street could make 85% returns with a single 30 second trade, wouldn’t they? Of course they would. Why should you as a single investor think you can beat the ups and downs of the market consistently? Please note, this is not to say don’t trade binary, but do so very carefully, and as a small part of your overall investment strategy.
This site will also touch on news from regulatory agencies on the legality of binary options — a news feed of legal. I know, I know, legal sounds boring, but if you want to play in the high risk high reward pool, you’d better know who is staying within the law, and who is breaking it, so you don’t pay the price and lose your money to unscrupulous brokers.
I hope you enjoy the content on your country’s binary options regulation and legality. If you have any questions, please leave a comment on the relevant article and we’ll try and write back soon.