Are Binary Options Legal In the US?
BUT it is important to understand that there is a BIG difference between Binary Options being legal and Binary option a broker being regulated.
Most, but not all, binary options brokers allow US citizens with US bank accounts to open accounts. Originally, binary options were illegal in the US. In 2007 the OCC (options clearing commission) made a rule change which allowed for binary options trading. In 2009 the CFTC started regulating brokers and Nadex was the first to offer a range of binary options from different asset classes.
Binary Options Legality VS. Binary option Options Regulation.
It is important to understand binary options that there is a difference between legality and regulation. Binary Options trading in the US is legal, however with the exception of the aforementioned Nadex and Binary Options offered on the AMEX, most of the online binary options platforms are not regulated in the US.
Binary options brokers have not been subject to specific laws which secure customers accounts and Binary option enforce fair play. Recently CySEC (Cyprus securities and exchange commission) enacted a law stating that all binary options brokers in Cyprus must be licensed and be subject to regulation. Most binary options brokers operate out of Cyprus, therefore this law will subject most brokers to regulations. SpotOption is the first of the platforms located in Cyprus to receive the CySEC license. Many brands use the SpotOption platform including TradeRush and Redwood Options which incidentally accept US traders as well. To see a full list of regulated US brokers, check this post.
Why Don’t All Binary Options Brokers Accept US Traders?
A couple of factors have caused some online binary brokers to prohibit allowing US customers.
The fact that Binary Options trading was illegal in the US.
Some of the original brokers began when binary options were just becoming legal in the US and they shied away from allowing US customers until it took hold. Some of those brokers still haven’t changed the policy.
The effect of legislation prohibiting online gambling.
Many online gaming sites had been heavily entrenched in the US market. When laws came into effect banning online gaming these sites took a tremendous hit as they lost a disproportionate share of their business. Some binary options brokers, fearing similar types of legislation which may prohibit, or binary options limit binary options trading, are avoiding the US market altogether.
UPDATE : Banc De Binary stops accepting US traders due to CFTC ruling. See Full Article.
Future of Binary Options trading in the US.
It is possible that as online binary options trading grows US lawmakers will look to impose legislation either limiting or regulating the industry. Reasons for this are twofold. For one thing they will want to enact regulations to protect the rights of US citizens to ensure that the deposits are protected and the trading is done fairly and binary options securely. The second and most likely reason is to ensure that the US government is properly compensated tax wise in an ever growing online industry. Ultimately online binary options brokers may have to apply for proper licensing to be able to operate in the US.