Is forex trading legal in usa

Being from India, I had many doubts about legal aspects of Forex trading. So, I took the opportunity to investigate and find answers to if Forex Trading is legal or illegal in India .
I am not a legal expert, hence my answers in this short commentary is not written for lawyers but for ordinary people looking for Forex trading in India . Thus, this short research is based on a number of short talks with local experts, reading the government regulation on ETF trading and Futures trading to find out whether or not Forex Trading is legal or illegal in India .
First Question: Can you trade Forex in India?
Common and the most straight forward answer for this question is, of course: – “there is a will there’s a way”.
You can trade Forex in India with Indian Exchanges (NSE, BSE, MCX-SX) which offers Forex Instruments. However, Indian Exchanges currently offer USDINR, GBPINR, JPYINR and EURINR pairs for trading purposes.
Forex Trading in India.
If you are an Indian resident and wish to trade forex, you cannot trade all the instruments as mentioned above. Hence, in short global Forex market is like not so global in India. Although, the foreign exchange (forex) market is decentralized global market to allow the trading of currencies (buying, selling exchange of currencies), there are countries seeing this decentralized market as a sovereignty threat. Thus, due to sovereignty issues the Indian government has limited Forex trading in India.
Why do we need the foreign exchange market?
The foreign exchange market helps both international trade and investments through currency conversion. For example, a business in the USA wants to import goods from India, the USA business has to pay for the imported goods in Indian Rupees, yet its primary income is in US dollars. Many retail traders may or may not know that the foreign exchange supports direct speculation. The evaluation relative to the value of currencies, speculation based on the interest rate differential between two currencies.
“Writing laws is easy, but governing is difficult.”
So, the government of India has not forbidden to trade Forex, but limited the trading for Indian residents to only trade currency pairs bench-marked against INR (Indian Rupee). As a an Indian resident, as long as you are trading through an Indian Brokerage, which allows access to Indian Exchanges such as the NSE, BSE, MCX-SX and providing access to currency derivatives is entirely legal. These tradable instruments are EURINR, GBPINR, JPYINR, and USDINR.
But, the Reserve Bank of India on the 10th of December 2015 allowed exchanges to offer cross currency futures contracts and exchange-traded currency options in three more currency pairs. The RBI allowed exchanges to offer cross currency futures contracts. The exchange-traded currency options in the pairs of EUR-USD, GBP-USD, and USD-JPY with immediate effect.
Why is India limiting Forex trading?
To answer the question – “Why is India limiting Forex trading?” we need to look into the main reason behind the RBI statement.
So, let’s study the logic behind the Reserve Bank of India (RBI). When you trade EURUSD with “non Indian” traders/brokers, if and when you lose you would buy USD from RBI. This results in an increase in current account deficit (lack of foreign currency reserve). If everybody in India trades forex with Foreign brokers and traders outside India, with the notorious nature of trading where the majority of traders eventually lose, RBI stands to lose a substantial amount of US dollars. To counteract this outflow of US dollars, the Indian Government then forced to buy more US dollars, by selling INR at cheaper rates, leading to the devaluation of the INR. Hence, the simple logic why Forex trading in India is limited .
Trading USD vs EUR in India.
You remember, above, I mentioned “there is a will there’s a way”, this is exactly true in case of Forex trading in India. Assuming that you want to trade EURUSD, USDJPY or EURJPY or other possible combinations, but your local exchange does not offer such instrument.
In this case, you may trade USDINR and EURINR that the INR gets eliminated and technically end up trading USD vs EUR. There is however a big disadvantage of trading Forex via crosses this way and it is the increase in transaction costs and there is often lack of liquidity.
Meanwhile, you should note that CFD platforms are not legal in India, thus from a broader perspective trading on leverage is not allowed in India. You as a trader should know your limits and act accordingly. So far, the government has not really cracked down on retail traders however there has been major crackdowns on a number of brokers illegally operating in India.
There has been regulated and unregulated brokers trying to establish their branches in India under different names, from education academies to training schools or consulting agencies. These entities often get away with their activities from a few months to a few years until someone gets to report them to the local authorities. Such as the xDirect Indian office raid earlier in 2016.
List of countries Forex trading is restricted.
Belarus Bosnia & Herzegovina British Columbia (Canada) Bulgaria Burma China (Strict regulations and event total ban) Cuba Indonesia Ivory Coast Iran Liberia Macedonia Malaysia Montenegro Myanmar Nigeria North Korea Pakistan Quebec (Canada) Romania South Korea Sri Lanka (Recently relaxed) St. Helena Sudan Syria Ukraine Zimbabwe.
India is not the only country to restrict Forex trading. Indeed , Forex trading is restricted in about twenty countries globally. These countries promote propaganda to push their citizens away of Forex trading (online or offline). Often you’d see some of these countries painting the picture for the west as evil.
For India, trading on other pairs rather than defined by RBI is illegal under FEMA Act. Trading forex in India through an online broker is a non-bailable offense in India. With many online brokers who misguide retail investors claiming forex trading performed legally through them. Moreover, RBI claims the restrictions are there to prevent retail investors/traders from losing big time. However, many India citizens believe that the main reason is to stop the currency outflow. I meanwhile, believe that RBI will ease in their limits in the coming period as India is going through the financial change.
Think we missed something? Let us know in the comments section below.

Is Binary Trading Legal In The United States?
The US is where retail binary options trading was launched in 2008, but traders in the US are gradually finding themselves out of options when it comes to trading with binary brokers. There are however new options for citizens and residents who want to do business with the top brokers.
TOP BROKERS IN THE US.
Binary Options trading in USA.
The first binary contracts were introduced to the Over-the-Counter (OTC) market in 1973, where they were exclusively traded by institutional traders. These were illiquid instruments that were traded as exotic options and were not accessible to the public. In 2008, binaries were made available to the retail end of the market when the Securities and Exchange Commission (SEC) enacted legislation to allow for retail trading of binary options.
The US binary trading market is presently expanding, and features three main brokers, otherwise known as designated contract markets or derivatives clearing organizations. Some of these brokers have affiliations with foreign companies that provide some form of value-added support to the brokers and traders working within the industry.
Two issues have defined the trading of binaries in the USA. These are:
SEC regulations on what assets can be traded The laws regarding the trading of online binaries.
According to SEC regulations, assets offered for trading in the US must be listed on the exchanges found in the country. These include assets listed on the Dow, Nasdaq, S&P500, the various commodity exchanges (e. g. NYMEX/COMEX) and the options/futures exchanges such as the CBOE.
When it comes to the laws regarding the trading of binary options on online platforms, the issues circulate around the perception of what constitutes online binary options (European-style options) and the US-style exchange traded binaries.
The CFTC has released several circulars and warnings regarding online-traded binary options, explicitly referring to them as a form of gambling. As a result, US citizens and residents are prohibited from doing any form of trading business with online-traded brokers. They are instead advised to trade with US brokers, whose product offering is in line with the laws and with the regulations of the CFTC.
The binary market in the US and the brokers operating within it, are regulated by the Commodities and Futures Trading Commission (CFTC).
Currency pairs & Spread.
The asset base available for trading on US based platforms is limited. Only 10 currency pairs are available for trading on NADEX: EUR/USD, USD/JPY, GBP/JPY, EUR/GBP, USD/CHF, USD/CAD, AUD/USD, AUD/JPY, EUR/JPY and GBP/USD. On Cantor Exchange, the number is even lower: just six forex pairs.
All binary options settle at $0 or $100. Depending on where the asset settles at expiration, the difference between the contract price (anywhere between 0 and 100) and the settlement value (either 0 or 100) is multiplied by the number of contracts to give the trading profit or loss.
Trading platforms.
When it comes to the online trading platforms used in the market in the US, the US binary options brokers have all opted to develop trading platforms that are unique to their brand. These proprietary platforms therefore offer the US traders the opportunity to trade specific contracts in a manner that is unique to each exchange, and yet complies with the CFTC rules on how binary options in the US are to be traded.
Specifically, Cantor Exchange LLC, one of the CFTC-designated binary brokers in the US, has created an innovative platform which was designed by Tradologic, an independent software vendor. Tradologic is a well-known software vendor in the market.
Deposit and withdrawal options.
What are the most popular options for deposits and withdrawals among binary options traders? US binary options traders are able to use certain means of deposits and withdrawals that are not available to traders in other countries. There are also some means of transaction which are not available to US traders.
PayPal: The top US binary options brokers are the only binary brokers in the world to avail their traders the use of PayPal as a deposit method. In the US, PayPal accounts are linked to bank accounts. This makes it easy to verify traders. Deposits and withdrawals are settled instantly. Cheque: Cheques issued on US account such as Ach are available to US traders. These usually take a longer time to be processed. Cards: Cards issued by American Express, Diner’s Club, MasterCard and VISA are available to US traders. Deposits and withdrawals are processed instantly. Local bank wires are also available from any of the US banks.
Digital wallets are generally not available to US traders. Skrill and Neteller do not accept US traders, so these cannot be used on the platforms of binary options brokers in the US.
Legality & Regulations.
What are the legal considerations and regulatory conditions attached to the conduct of the brokerage and trading of binary options in the US? The legality of binary options in the US is contained in the various bulletins and circulars released by the Commodities and Futures Trading Commission (CFTC), the agency which regulates the binary options industry in the US.
The legality of binary options borders on the following points:
Whether the broker has registered the assets it hopes to offer for trading with the SEC. This status is determined with a tool on the SEC site known as EDGAR. Whether the trading platform itself is registered as a trading exchange in the US. Again, the SEC website is the source of information on licensing of exchanges to offer binary options. Listing of the provider’s platform as a designated contract market. This status can be checked on the CFTC website.
Putting these three metrics together, a binary options broker can only be licensed to offer binary options in the US if:
The assets it offers are listed on an SEC-licensed exchange. If the platform is registered as a trading exchange. If the broker itself is registered as a designated derivatives contract market.
Till date, only three entities have fulfilled these conditions to warrant licensing from the CFTC.
Here are the frequently asked questions that most users have about the conduct of binary options in the US.
Answer: Contrary to the general perception, they are are legal in the US. However, they must be of the exchange-listed variety, as mandated by the SEC and the CFTC. In other words, traders are only allowed to trade binary options on assets that are listed on the exchanges found in the US market.
Is it safe to trade binary options in the US?
Answer: The CFTC is the regulator of binary options in the US. The CFTC has a reputation for being arguably the strictest financial market regulator in terms of market sanitization and enforcement of sanctions against errant brokers. Costs and punitive financial sanctions which regularly require brokers to refund money considered to have been taken off clients from irregular brokerage practices have been applied in the recent past. This makes it very safe to trade them in the US.
As a US citizen, am I allowed to trade binaries with offshore brokers?
Answer: The CFTC considers trading with offshore binary options companies as a form of online gambling, which is illegal under US law. Therefore, US citizens are prohibited from trading binary options with offshore brokers.
Do I have to pay tax on the proceeds of my binary options trading?
Proceeds of binary options trading have to be reported to the US Inland Revenue Service (IRS) and are subject to taxation.
Am I able to use binary robots on the US platforms?
Answer: US platforms are not configured to allow the user of robots.
Are binaries in the US offered on a fixed or variable payout basis?
The exchanges, NADEX and Cantor Exchange offer payouts on both a fixed and variable payout basis.
Conclusion.
The article has attempted to bring to light, the peculiarities of the US binary options market as well as the existing regulations guiding the operation of binary trading in the US. Presently, only US citizens and residents can trade exchange-listed binary options in the US. This looks to be the way things will work for a long time to come.
Related articles:
BinaryTrading. org has financial relationships with some of the products and services mentioned on this website, and may be compensated if consumers choose to click on our content and purchase or sign up for the service. – U. S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risks. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC rule 4.41 – hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. no representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
DISCLAIMER.
Please note: All content on this website is based on our writers and editors experiences and are not meant to accuse any broker with illegal matters. The words Scam, blacklist, fraud, hoax, sucks, etc are used because all content on this website is written in a fictional, entertainment, satirical and exaggerated format and are therefore sometimes disconnected from reality. All readers must personally judge all content and brokers on their own merits. Additionally, visitors comments are not moderated other than the obvious link spam. People lie. Use your discernment.
DISCLAIMER: Trading binary options is extremely risky and you can lose your entire investment. Only deposit and trade with money you can afford to lose. Always refer to local laws, jurisdictions and authorities before performing any action on the internet. The content on this website is NOT financial advice and by use of this site you agree to hold us 100% harmless for any loss.

US Regulations for Forex Brokers.
Foreign currency exchanges (forex) run non-stop across the globe through over-the-counter markets. The global nature of this boundary-less market allows seamless access, e. g., an Australian trader can trade in euros and Japanese yen (EURJPY) through a US-based broker despite geographical boundaries.
Speculative trading in the retail forex market continues to grow. As a result, there can be intermediaries (like banks or brokers) who engage in financial irregularities, scams, exorbitant charges, hidden fees, high-risk exposure offered through high-leverage levels, or other bad practices. Internet and mobile app-based trading allows smooth trading, but also have dangers such as unrecognized firms running sites that may close unexpectedly and abscond with investors’ money. As a result, regulations are necessary and set by competent authorities to ensure such practices are avoided. Regulations are aimed at protecting individual investors and ensuring fair operations to safeguard clients’ interests.
The most important criteria when selecting a forex broker are the regulatory approval status of the broker and which authority governs the broker.
How US Authorities Regulate Forex Brokerage Accounts.
The National Futures Association (NFA) is the “premier independent provider of efficient and innovative regulatory programs that safeguard the integrity of the derivatives markets” (including forex). The scope of NFA activities is as follows:
After due diligence, provide necessary licenses to eligible forex brokers to conduct forex trading business. Enforce required adherence to necessary capital requirements. Combat fraud. Enforce detailed record keeping and reporting requirements regarding all transactions and related business activities.
A detailed regulatory guide is available on the official NFA website.
Key Provisions of US Regulations:
"Customer" is defined as "individuals with assets of less than $10 million and most small businesses," underscoring that these regulations are meant to protect the small investor. High-net-worth individuals may not be necessarily covered under standard regulated forex brokerage accounts. Limits available leverage to 50:1 (or deposit requirement of only 2% on notional value of forex transaction) on the major currencies, ensuring ignorant or uneducated investors do not overstep and take unprecedented risks. Major currencies are defined as the British pound, the Swiss franc, the Canadian dollar, the Japanese yen, the euro, the Australian dollar, the New Zealand dollar, the Swedish krona, the Norwegian krone, and the Danish krone. Limits leverage of 20:1 (or 5% of notional transaction value) on minor currencies. For short forex options, the notional transaction value amount plus the option premium received should be maintained as security deposit. For long forex options, the entire option premium is required as security. First-in-First-out (FIFO) rule prevents holding simultaneous positions in the same forex asset, i. e.. any existing trade position (buy/sell) in a particular currency pair will be squared off for opposite position (sell /buy) in the same currency pair. This also implies no possibility of hedging while trading forex. Money owed by the forex broker to the customers should be held only at one or more qualifying institutions in the US or in money center countries.
How US Regulations Differ.
Care should be taken to verify each ownership, status, and location of each forex trading firm, website, or app before signing-up for a trading account. There are many websites claiming low brokerage charges and high leverage (allowing more trading exposure with less capital), some as high as 1000:1. However, almost all such sites are hosted and operated from outside the US and may not be necessarily approved by the concerned authority in the host country. Even those authorized locally may not necessarily have regulations that apply to US residents. Regulations may slightly vary from country to country in terms of offered leverage, required deposits, reporting requirements, and investor protections.
Here is an indicative list of forex brokerage regulators for a few select countries:
Australia - Australian Securities and Investments Commission (ASIC) Cyprus - Cyprus Securities and Exchange Commission (CySEC) Russia - Federal Financial Markets Service (FFMS) South Africa - Financial Services Board (FSB) Switzerland - Swiss Federal Banking Commission (SFBC) UK - Financial Services Authority (FSA)
Verifying a broker’s regulatory status.
The NFA provides an online verification system called Background Affiliation Status Information Center (BASIC), where the status of US-based forex brokerage firms can be verified using their NFA ID, firm name, individual name, or pool name. Care should be taken to use the correct name/ID in the correct form, as many forex broker firms are known by different names (e. g., a website name may be different from the legal corporate name).
Financial regulations require a fine balancing act, with constant room for changes as markets develop. Too little regulation may lead to ineffective investor protection. While too much regulation can result in lost global competitiveness and reduced economic activity.

Is Forex trading Legal ?
The FOREX (Foreign Exchange) market is a global decentralized market for trading of currencies (EURUSD, GBPUSD, USDJPY etc.) round the clock on week days. Forex trading includes buying, selling and exchanging of currencies at spot prices or determined prices.
Because of the sovereignty issue involved while trading two currencies, Forex has little supervisory entity regulating its actions. This aspect makes some countries to regulate Forex trading and put Forex trading into a legal framework.
Now, again the question remains – Is Forex trading legal ?
The most important aspect while starting Forex trading is the legal aspects involved with it. Generally speaking in most of the countries FOREX trading is absolutely legal , but you have to abide with and operate complying with the legal framework of your country. You have to see your obligations towards incomes generated from Forex trading. If you are not a legal expert , best thing you can do is to consult a qualified tax adviser. You must remember that income generated from Forex trading is taxable in most of the countries like any other income.
Complying with the regulations related to Forex trading is not so difficult. It is almost similar to complying with any other business license. While applying for any business license the businessman provides enough information regarding the business to the licensing authority so that they can make a decision to grant a business license. Once the license is approved , its your duty to do business within the terms of the license.
Forex trading can also be considered as a business which has its own legal framework set by the trader’s country. The trader must carry out Forex trading within the legal framework. If the tax obligations and legal aspects are met then there is no need to worry about.
In order to keep track of your Forex trading transactions archive your weekly trading log. It can help you calculate your tax and act as a record of your business for presenting to tax authorities. Some times the tax authorities may require a printed copy of your trading activity of the financial year. The absence of tax records may be viewed seriously when it involves Forex trading.
The trade records can be obtained from your broker’s platform and archived for future reference. If the Forex broker is from your country, they may help you calculate your tax liability.
Why Forex trading is illegal in few countries ? Is Forex trading illegal ?
Few countries have put some restriction on Forex trading to tackle with the country’s foreign currency reserve. Some times the restrictions are temporary and they allow trading again, when Forex reserve improves.
Online Forex trading is not confined to any specific country, it is a global market. Traders from all over the world keep trading. Its quite well known fact that most of the newbie and inexperienced traders lose money while trading , and only 10 % of the Forex traders make profit. When more number of traders from a country lose money it is to be paid to counterpart trader through the broker. This payment has to take place by USD or EURO . Hence it affects the country’s Foreign currency reserve and directly affects that country’s currency valuation. Because of this some countries have put restrictions on overseas Forex trading , where as they mostly allow Forex trading within their country.
If everybody in a country trades Forex with other overseas traders, assuming the risk involved in Forex trading where 90% of traders eventually lose, the central bank of the country stands to lose a huge amount of Dollar. In order to compensate the outflow of Dollar, the government will be forced to buy more US dollar, by selling its own currency at cheaper price. Thus leads to the weakening of local currency. Hence some countries have made it illegal to trade Forex through overseas brokers to avoid unnecessary drain out of foreign currency reserve. And it becomes the duty of a responsible citizen to abide by the rules and help the economy of his country to grow and prosper.