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Updated on: 8 November 2018

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The world of binary options trading is full of interesting ironies. For instance, this industry began in the US, but the interesting thing is that the country has binary options laws and regulations that alienate most world-class industry players.

Binary options trading is very popular in the US, and for years, these traders have had no local brokers to turn to. The only option was to use overseas binary options brokers that accept USA traders.

As you can imagine, this workaround was fraught with dangers, and many US traders have lost their money to scam brokers in their attempts to find binary options brokers that would welcome their business.

Additionally, many of the leading licensed binary options brokers could not accept US traders because they were trying to protect themselves. Offering unlicensed binary options trading services has caused the end of many binary options brokers.

And any half-decent broker that has worked hard to obtain licensing from a reputable authority would not risk losing it or ruining its reputation by being on a major government’s blacklist of unlicensed binary options operators.

The point is, there is no way you can be completely safe by using an offshore binary options broker as a US trader. Although binary options trading is legal in the US as per the country’s federal and state laws, the authority with the mandate to issue broker licenses is not very generous with these licenses.

Only NADEX has been given the mandate and actual US binary license to offer binary options trading in the country.

Is Binary Options Trading Legal in the USA?

The funny thing is that a US resident can trade binary options without having to run into any legal problems. Only brokers run the risk of facing adverse legal action for operating in this market. But the fact that the US has a licensed binary options operator – NADEX – should prove beyond doubt that this industry is legal in this country.

The Role of US Financial Regulators

The CFTC and the SEC have the authority to award licenses to suitable binary options operators. But before doing that, they have the much more difficult job of ensuring that the companies getting such licenses are safe, secure, and offer financial services that are permissible under the US law.

Most offshore brokers don’t fit the bill, especially when it comes to that last part. So it should not come as a surprise that just NADEX has the legal authority to offer binary options trading services in the US at the moment. The country’s laws are generally very unfavourable to offshore companies, which is why none of them has earned the regulators’ approval so far.

The truth is that some of these foreign companies are very good, and would easily meet the licensing requirements of the US regulators. However, their notoriously cautious approach to binary options licensing makes this an unachievable dream for many of these companies.

Use Only US-Licensed Binary Options Companies to be Safe

A US binary options trader should find a broker that has been licensed to offer its services to US residents. The most prominent example of such a broker is NADEX, which is regulated by the Commodity Futures and Trading Commission (CFTC).

This binary options operator has the authority to market binary options services in the US and accept US account holders. It also has to honor some of the most stringent operational requirements in the world. Naturally, that also makes it one of the best platforms for binary options trading.

Sure, lots of US binary options traders use brokers regulated in Europe or some other offshore jurisdiction. For most part, the best of these companies are safe for US traders. But that is not enough because they also don’t really meet the legal obligations needed to serve US clients.

That generally means that US traders who have issues with their offshore binary options brokers have no way of getting protection under local laws. What that says is that offshore binary options companies should be avoided, however reputable their operations.

Only a broker that respects US binary options regulations – such as NADEX – can offer an ideal trading environment for a US trader. The binary options world has its fair share of surprises. So, it’s always better to be on the right side of the law in case things go south such as when a respected binary options regulator decides to make drastic changes to its laws, putting the future of such companies and their customers in question.

US Always Cracking Down on Offshore Brokers

Another reason to avoid offshore brokers and stick to options like NADEX, however limited they may be, is that this country is always cracking down on binary options companies it has not licensed. So, any offshore company that is proving popular among US traders is usually well on its way to attracting the sort of attention that will get it on the country’s warning list.

It should be pretty obvious that working with a binary options broker that has appeared on some blacklist or another is generally not a good idea. Usually, this is a sign that, as a resident, you are on your own if things go wrong.

Obviously, this is because such a binary options company will feel less obliged to protect your interests. Besides, such bans mean that the company may have to terminate some key features for traders in such territories to avoid further legal problems. These can include restricted payment processing options, reduced client support services and so forth.

The other problem is that the binary options laws are still a work in progress in many parts of the world. And at any time, a legislation may be passed that could make previously tolerated operators to be viewed in negative light. This could result in them getting targeted for being in violation of local laws, and this would put the traders at risk as well.

US Binary Options Laws Still In Development

One of the reasons that offshore brokers find it impossible to get US licensing is that the country is yet to have laws that recognize this industry for what it is. In future, this may change and offshore companies could have the authority to operate in the US legally.

When the legal environment becomes permissive, leading global binary options operators will without a doubt seek US licensing and offer their services to US traders without any hiccups. But until then, it is highly recommended that you stick to US-regulated binary options operators, however, limited this list might be.

The Best US-Licensed Binary Options Operators

That’s easy. It’s NADEX. Only this company has managed to obtain the license to offer binary options trading services in the US. That has made it the only option a US trader can use without resulting to offshore brokers that accept US traders at the moment.

It is quite a relief that even when ranked against the best offshore broker options available to US traders, NADEX does pretty well. The quality of services it offers are quite good. With this company, client funds are also very safe and secure because NADEX has to segregate client and company funds.

US binary options traders can also expect to trade with as little as a dollar, try demo trading before using real money, and enjoy bonuses when they join this company. The platform, though proprietary, is also very well designed; and its quality is at par with the best the industry has to offer at the moment.

For this reason, NADEX is the perfect, albeit the only option for binary option traders in this country. The stringent CFTC licensing it possesses means that you can expect impeccable ethical and business conduct from this company. Besides, you can rest assured that the US law will be on your side in case the company does anything unprofessional in its dealings with you.

With offshore companies, you are mostly on your own. The laws that regulate such companies usually prioritize the safety of clients within the countries issuing the licenses. Therefore, as a US trader, no authority might help you if your rights are violated.

But with a US regulated binary options operator, you can bet that things will be different. Which is why you should stick to using a company like NADEX, even though it is your only option at the moment.

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Bill Graper
Bill Graper

If we do trade binary options from a broker outside the USA, do we have to pay taxes on any earnings?

Jon Smith
Jon Smith

Living in the U.S. I have been unable to deposit funds in an account with Finpari. I have tried once with my debit card, and once with PayPal which I know has the same card connected to it, but thought it may have a different outcome. When I tried to deposit money, I have gotten a Visa Verified authorization page where I have to fill out same card information, but still not accepted. Talked to a banker at my bank and they basically said that’s because I can’t deposit money into those accounts because it’s illegal. So with Finpari, or… Read more »

Jonas Wayne
Jonas Wayne

why not try using U.S regulated brokers, most at times its been found that those regulated outside U.S are scammers , just saying

Daniel Joseph
Daniel Joseph

We would like traders to give their views and feedback to us. What was your experience using Binary Trading? Did you make money? Did you lose money? Do you thing the US strict laws on not allowing Binary Brokers in at the moment is correct? Voice out and we make your voice heard. see us on binarytradingglobal a website that reviews brokers and accepts feedback from binary traders