Is Binary Options Legal In the US?

In recent years many brokers have shut their doors to US traders, it started with Anyoption and 24option and soon after many of the smaller brands gave up on their US market share, locking their doors to US investors. It turns out that one of the CySEC requirements for EU regulated binary options brokers is to COMPLY WITH US FEDRAL LAW which means that if you break it down, only the EU regulated brokers are actually operating in accordance to US law, or at least not invading any US jurisdiction which many brokers such as Goption, Redwood Options and a few other brokers are taking the risk and offering access to US traders.

Based on the United States Federal Law and according to the CFTC decision, It is AGAINST THE LAW to solicit U.S. persons to buy and sell commodity options unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt.

Many brokers offer access to US traders without having the regulations to do so, furthermore the CFTC requires the trading firm to be headquartered within US territory in order to be fully compliant with the Federal law. In 2015 NADEX.COM is a recognized US exchange, offering US traders binary options trading on a US regulated exchange based in Chicago. For more information, please visit my Nadex review.

If you have any experience to share regarding your experience with a US binary options broker or have any questions regarding any offer you are considering, don’t hesitate to leave your comments or questions below and I will be glad to get back to you as soon as possible.

Be warned that many blogs and YouTube channels are going to continue and promote binary options brokers for US traders, knowing that it’s illegal. If you own a binary options blog or forum, you should warn any potential US visitors from signing up with a broker that is not recognized by the CFTC, otherwise you are breaking Federal law and it’s a fact.

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47 thoughts on “Is Binary Options Legal In the US?

  1. Keola

    Is Binary Options trading legal in Hawaii (on a state level)?

    Reply
    1. Michael Freeman Post author

      Hi Keola, as a trader binary options is legal in the United Stated. However, the people who are potentially taking a risk are brokers and advertisers who solicit binary options for US traders since it’s not regulated as in Europe for example. As a trader you have no legal risks, you can choose to go with Nadex which is completely regulated in the US but different from most platforms, or you can go with a broker that’s not based in the US, in both cases you will not face any legal or civil consequences as long as you pay your taxes for capital gains or as advised by your local accountant. It’s important to note that up until now, the only broker that ever faced legal issues in the US was Banc De Binary, and it was for false advertisment and less about offering trading in the US since none of the other brokers ever got sued in the United States.

      The only risk is that if binary options will be completely outlawed and strict regulations will be enforced, many brokers will be forced to completely discontinue accepting US traders. We’re not there yet and it may never happen but it’s something to consider.

      Reply
  2. kayakjack

    I just saw an ad for “The Fisher Method” for binary trading. Is it a scam or real? Can an US citizen use it legally?

    How can I use your “Auto Trader” legally in thhe US and with what broker,

    Thanks for your great website!!!

    Reply
    1. Beach Bum Swag Post author

      Hi Kayakjack, unfortunately the Fisher Method is a complete scam, check out my latest blog post and also Google the keywords “Fisher Method Scam” and you’ll find some warnings and testimonials from people who are really disappointed. You can use my auto trader in the US, it’s synced with a few brokers who accept US residents. The software will pick the most suitable broker for you based on your IP, they way we designed it.

      Reply
  3. Deborah Schartz

    Yes how do we get our money back from these brokers like Empire Option?

    Reply
    1. Beach Bum Swag Post author

      Empireoption is not known to scam traders at least not based on the complaints I get. Did you take a bonus? You are basically required to provide them with documents to verify your identity and then you can qualify for a withdrawal. If for any reason they fail to cooperate with you, simply file a credit card dispute against them, you have a high chance to win since they are a web-based company and it’s basically your word against their word.

      Reply
  4. Leo Rodriguez

    Michael,

    I am in NYC I know that any option is not available Can I use any option using a VPN system?
    or what options other than Nadex do I have?

    Please let me know

    Reply
    1. Beach Bum Swag Post author

      You don’t need a VPN system if you join one of the world-wide brokers but it’s an reasonable idea and a common practice by folks who understand how to use a VPN. I also have one but for other needs. The VPN will allow you to register with a reliable EU regulated broker such as Topoption, Anyoption or OptionTime as an alternative to Nadex since they block access for US..however surfing is slow with most VPN services and the binary options platforms are web-based so you must use a powerful and speedy VPN.

      Reply
  5. rey casto;;p

    boss capital us regulated? any good? i wanted cherry trade but i am looking for a us regulated and us lowest minimum deposit with quick withdrawal and mobile app iPhone(also i can use with your manual signals

    thanks

    Reply
    1. Beach Bum Swag Post author

      Boss Capital is not regulated under any investment authority and definitely not under CFTC, SEC or anything remotely similar.

      Reply
  6. Alex

    H

    I did not know about USA laws, so I have aact with empire option.
    They give me Bonus.

    I told close my acct and give my deposit back.But they said i have to bring more money in platform.

    How can I make them to give my deposit back and close my acct.

    Reply
  7. willjones

    So what USA broker can we used I would like to try your signals but what you are saying people in the USA is pretty much screwed.

    Reply
  8. darylluke

    Rafael Rios,
    My understanding is that in USA(and territories) it is illegal to SOLICIT non-CFTC registered brokerages in the USA.

    Would you kindly cite the link or quote where it states “it is illegal to trade with non registered brokers in Chicago…”?

    ~darylluke.

    Reply
  9. Rafael Rios

    Thank you very much for your efforts. I noticed a question by Mike Riley I would like to comment to. Puerto Rico is a US possesion in the Caribbean; as such US rulings apply in the island just as they apply to the continous 48, Alaska and Hawaii. If it is illegal to trade with non registered brokers in Chicago, it is also illegal in the island.

    Reply
  10. CJ Wallace

    Michael –

    Thanks for the good thread. Nadex is not reliable and I have found when simming that even though your trade expires as a winner…you lose money. It is not truly a yes/no trade. Maybe I am not understanding it correctly but that is what I see. However, you mentioned CherryTrade. Can we use your software if we have a Cherry Trade account even if we live in the US? Thanks.

    Reply
    1. Michael Freeman

      Hi CJ, I respect your comment and I am not a big fan of Nadex myself, it could be that some platform manipulation exists even with Nadex. On the other hand, I never encountered any allegations of Nadex being involved in any shady business practices or not returning clients funds upon withdrawal requests. CherryTrade is safe and one of the top rated brokers on many websites including my blog yet they are not CFTC regulated. In the first two weeks, after launching my auto trader, my developer reported many technical issues, I am still not clear if it’s on our side or on their side because I am not a tech guy. I had to remove them after a major backlash which had to do purely because of the tech issues. CherryTrade is still listed as one of my recommended brokers on my manual (TEXT and Email) signals group page. I no longer require traders to register with a broker in order to join my manual signals group if they already signed up with my Auto Trader so you can basically get both now with one broker registration. I also want to add that the donation to a charity is not mandatory but very much appreciated and you may also pick the charity organization istead of donation to the ones I listed on http://www.MikesAutoTrader.com If you are mainly interested in CherryTrade, I would recommend that you join my manual signals group and I’ll add you. If you have any questions you can also email me at tradigbinaryonline@gmail.com or reply to my comment. Cheers to a successful 2015!! Mike

      Reply
  11. Gerald

    Michael,

    First I’d like to say thank you for your efforts and will, to educate those of us who are new to trading and need this type of information. Without you I would have tried registering with 24options which would have been pointless (U.S. citizen). 2 part question, first, which non regulated brokers would you suggest if any and second would you happen to know if I can trade thru one of these these brokers (cherrytrade, Goptions, ect) while I’m over seas in Korea? I’m currently on a tour in ROK? Thanks in advance…

    Reply
    1. Michael Freeman

      Just to clarify, it’s legal for US traders to trade with a non CFTC regulated broker but it’s illegal (not really enforced) to solicit trading with non US based, CFTC brokers.. CherryTrade is a reliable non CFTC broker, it’s entirely legal for you to trade with them according to my understanding.

      Reply
  12. Mike Riley

    Hey Michael,

    Mike from Puerto Rico again. I left a reply on another page and just read this one. Glad I did, because now I’m concerned about US regulations. I’ve been told by more than one broker that those regulations don’t apply to PR. Is this really true. Can I trade with any broker while living in PR?

    Thanks for any insight,

    Mike

    Reply
    1. Michael Freeman

      Hi there, this information might be true. In general it’s legal for traders to join non CFTC regulated or US based brokers even if they are US citizens but the issue is that the Feds and CFTC are not interested tht US citizens will be solicited by these companies. It could be because they want to keep the business at home since many countries already regulated binary options, but anyway, it’s important to understand the CFTC warnings and to conduct your trading legally. As a trader, even from within the US, you are free to trade with any broker you like, this is the bottom line and my understanding concerning this topic. I will encourage anyone with a legal background to join this thread and share your feedback. I can’t say that laws are %100 clear at the moment but I can tell you that I am not familiar with 1 Forex or Binary Options trader, in any country, who is facing any type of legal issues due to online trading activities, as long as YOU PAY YOUR TAXES of course!

      Reply
  13. Sam

    Michael,

    As of December 20,2014 Stockpair.net must cancel all U.S customers accounts. Bummer. I was with Stockpair for 2 years and they had the best platform. Is there another platform in the U.S that is comparable to Stockpair? Nadex is sort of complicated.
    Thanks

    Reply
    1. Michael Freeman

      Hi Sam, True! StockPair was a good choice for US traders. Based on reputation I would say CherryTrade is the best alternative to Nadex and they offer similar features that StockPair offers basides PairTrading. Here is a link to my CherryTrade Review.

      Reply
  14. Destini Ingoldsby

    Thanks Mike,
    I wish I had found your website when I first started trading Binary Options – would have saved me alot of money and heartache. I also wish I would have thought to do more homework about brokers. Unfortunately I deposited money with Cedar Finance because it was a recommended broker by a previous signal provider. I appreciate your feedback, I’ll be filing a report.

    Reply
  15. Destini Ingoldsby

    I just contacted Cedar Finance to see if I could get my deposit back, 1 of the 3 brokers I traded with. When I asked if they were CFTC regulated I was told that they are CySEC regulated and that by law they don’t have to comply with CFTC regulation.
    I was also told; “All assets being traded on our platform are from CFTC registered list of markets and Additionally, there is no regulation that would exclude us from American market as we are based in EU and CFTC has no jurisdiction over our platform.”

    Is this true, are they actually complying or should I file a report. I don’t want to file a report unless they are wrong. But if they are actually complying -Great!

    Reply
    1. Michael Freeman

      Unfortunately this is a lie. First lie is that Cedar Finance is regulated by CySEC, second lie is that CySEC regulated companies can solicit or offer any type of binary options trading to US residents/citizens inside or outside of the US. Based on the CFTC, and you can call them (they answer really fast), only CFTC regulated and United States based brokers can offer this type of trade to customers. The reps goal is to manipulate you into trusting them and funding an account with them. Furthermore, if you mentioned Cedar Finance, it’s one thing to register with an unregulated broker but if you choose this path, at least don’t do it with an obvious scam. Here is one very concerning page I found on Cedar Finance, 59 complaints only on ScamBook.com http://www.scambook.com/company/view/94881/Cedar-Finance and it’s not it, everywhere you go online you will find negative reviews on them, excluding affiliated reviews obviously.

      Reply
    1. Michael Freeman

      Thank you for sharing this article Jay! Do you have any comments relating to binary options in the US? or anything you read in this article. It’s very long. Just want to get your feedback if you can. Cheers! Mike

      Reply
  16. Jack Dopp

    Mike, Do you think we can get our money back from a Trader where we accepted a “bonus” before being warned by your website of the consequences? I put up $500 with SPOTFN in January, a couple weeks before I ran across your site. Grampajack

    Reply
    1. Michael Freeman

      Of course! You should file a dispute, this bonus thing requires traders to generate an ‘endless volume of trades’ before qualifying for a withdrawal. It’s unfair and unjust and you should certainly consider filing a credit card dispute against this company. It’s never too late, you can also threaten them before you file a dispute. You can also contact the IC3.GOV if you have a reason to believe you were scammed. All the best to you! Mike

      Reply
  17. Destini Ingoldsby

    Thanks Mike,
    I am waiting to hear back from BigOptions support manager to find out if they will honor their agreement to refund my deposit. Otherwise I will inform them that I intend to report them to the website you provided, unless they do so. I don’t like to get nasty with people. But like you said, sometimes when it is a matter of money.. you need to use alittle higher power to keep these companies in check.
    Thank you for the information where to report them. I will keep you post, when I get an update.
    I agree.. way to many people just flat out lie or manipulate the truth to benefit them. We need more honest people like you! Keep up the great work! I’ll be sure to email if I need more help 🙂

    Reply
  18. Destini Ingoldsby

    I had NO idea about the CFTC regulations. I have always tried to pick brokers that where regulated, but I wasn’t aware that just because the broker is regulated doesn’t mean they are complying by US law. In the past month I had setup an account with BigOption after verifying with them that they except US traders. Which I was told they did. But upon reading this, I read back over their site to find out if they are CFTC regulated.. they are not. Upon confronting them about it, I was then told they do not let US traders trade live accounts. I’m going to fighting to get my money back. Since they not only lied, but are stealing money. Any suggestions as to how I can report this company?

    Reply
    1. Michael Freeman

      Hi Destini,

      Many brokers try to manipulate their traders into thinking that they are regulated in the US, it’s very unfortunate. In reality, only Nadex.com is currently based and regulated in the USA. It’s obvious that some traders like it and some don’t, but it’s reality. No broker or website should solicit binary options to US traders with non CFTC and SEC regulated brokers. I would report them incase they fail to refund your money, otherwise if they just lied to you, move on and look for honesty somewhere else. The world is full of liars.. it’s a waste of your time. If money is involved it’s a different story and there are multiple ways you can get your money back and report a company. The number one websites are afraid of is the IC3.GOV. It’s enough that you make threats to file a complaint with the IC3 to make a broker refrain from trying to screw you over. If they fail to honor a withdrawal request, filing a credit card dispute is the first thing you need to do.

      From experience I can tell you that it’s better to first threaten the company before filing complaints, it might get you the money back faster. If you need help in this process you can contact me at tradingbinaryonline@gmail.com

      Good luck and have a great weekend!

      Mike

      Reply
  19. John

    Hey Michael. Is there any chance that the US will in the future regulate and license more binary options brokers than just NADEX? – I mean, I find a it a bit weird that only one company is allowed to offer binary options. This means that NADEX basically has a monopoly at the moment, which is a huge incentive to lobby regulators to prevent any other future brokers from becoming licensed.

    Is there any chance that there will be other brokers regulated in the future or we just get stuck with NADEX forever?

    Reply
  20. Dennis Roembke

    Hi Mike,

    I was just starting to get excited about entering the binary options trading arena when you (and Paul) announced your signal trading software(s). I have watched binary options from the sideline for quite a while now, realizing that MANY brokers and signal trade services and software were all out scams. You and Paul are both a breath of fresh air telling the truth about binary options brokers and signal services.

    I thank you and Paul for realizing the legalities for US traders. I totally respect you both and applaud the transparency that you are collaborating on with the CFTC Badge initiative.

    But I am also sad that we are not able to use your software(s) because the NADEX platform is so different. My Dad trades regular options and the NADEX type of platform that is very similar to regular options chain type platforms (Think or Swim comes to mind)

    My question to you (and Paul if he is reading) is will you be offering US traders either training, signal services, or software that will work (sync) with the NADEX platform? No doubt it will take a bit of a learning curve to use the NADEX platform, but in the end, it will be nice to make money with binary options and know that it was legally made and therefore not subject to any form of prosecution from the US government.

    Thanks,
    Dennis Roembke

    Reply
    1. Michael Freeman

      I completely understand the disappointment, trust me that I would love to keep my software available for US traders but on the Internet many people, including us, forget that what we write or say can have a major influence on visitors and we must be responsible and ethical, the Internet is flooded with lies and misrepresentation. I posted a new video calling for other blogs to make the necessary changes and to stop promoting “US Friendly” brokers. Many blogs falsely state that some of the unregulated brokers, have regulations with the CFTC and this is completely false.

      Nadex is not the best choice we have in the US but it’s the safest and the only choice we, as traders and bloggers, can offer to our visitors.

      I’ve seen videos and articles posted around the same time calling me a scam and stating that US trading with unregulated brokers is completely legal. Well, if they paid more attention to my videos they would reach a different conclusion. The laws might not catch up with ‘you’ as an online trader but they fail to realize or accept the definition of solicitation. This also means, telling your visitors that they can trade in the US with unregulated brokers and it’s fine.. well this is also solicitation! It doesn’t matter if the police won’t be knocking on your door as a trader, it’s against the law for any individual to advocate for trading in the US with unregulated brokers in any shape or form, this is again, solicitation.

      I call for other blogs and forums to fight against the lies and work towards making the industry more transparent instead of attacking my name on a personal level. Everyone with brains on their shoulder will eventually realize who is the scam and who is not.

      In the future I will do my best to provide more information relating to trading in the US with Nadex. I will continue to discourage traders in the USA and do my best to prevent them from signing up with unregulated brokers, the attacks may continue but I will make sure this information goes viral and available to the public.

      Your feedback and questions will help this page rank higher on Google. I appreciate any type of feedback. Thank you for your comment Dennis and have a great weekend!

      Cheers! Mike

      Reply
  21. John Legett

    According to this site binary-optionsbrokers.net/cftc-regulated-binary-options-brokers/ there are several registered with the CTFC in the US. I have paper traded with BeeOptions and they seem to work well. I have heard Cedar financial has a good reputation although I have never used them. Nadex has a horrid platform and just as happy they can’t be used.Please let me know if you develope autotrader to work with a US compliant broker. Cheers.

    Reply
    1. Michael Freeman

      The list of “CTFC brokers” they recommend is entirely fake. Check with the CFTC, they answer the phone very quickly (up to 1 minute) CFTC 1-866-366-2382. They will be able to verify that the following brokers as listed on the site you mentioned: Bee Options, ZoomTrader, EZtrader, Cedar Finance, Royal De Bank, TradeTush, TraderXP and Lbinary are ALL NOT CFTC Regulated!! None are actually even EU regulated.

      The website you mentioned is very misleading. In a new video I am calling for other website owners and forums to start practicing more transparency and accuracy of information and this is a pure example of the confusion that some websites are trying to create, check out my latest video Binary Options Transparency and CFTC Badge

      As for my Auto Trader, unfortunately it will remain unavailable for US traders until I am able to find a suitable broker with CFTC regulations. The Feds are very strict when it comes to unregulated binary options solicitation to US traders.

      Reply
  22. BUTCH DERKSEN

    Hi Michael. I am a newbie/retired/looking for extra income. So,I need a trading platform like Mike’s BinaryOptionsAutoTrader + a
    broker that is recognized in the US – like NADEX?? And how do I signup with you and your AUTO TRADING SIGNALS and with NADEX? Does your BO work well with NADEX? Thanks for the time you have taken from your busy schedule to address my concerns.
    Thank You!!!

    Reply
    1. Michael Freeman

      Unfortunately my auto trader is no longer available in the US, Nadex is not a broker I can sync with the software as they operate on a completely different platform while most brokers operate on Spotoption, Keystone or one of the main platforms for binary options. I am looking for US regulated brokers to add to my auto trader but until then, I cannot accept any new members from the US. I am really sorry about that. You can also check out my list of recommended signals services for alternatives. Cheers! Mike

      Reply
  23. Daymeon

    Wow. I’m in North Carolina. Before this news, I was told that Titan Trade, LBinary and Big Options were U.S. friendly and could be used. Michael, can I use your manual signals with NADEX?

    Reply
    1. Michael Freeman

      Hi Daymeon, unfortunately this information is not trueo. Lbinary, TitanTrade and Bigoption are available in the US, however they are not registered with the SEC or CFTC, other traders from outside of the US may sign up with the three brokers. I plan to start sending signals for Nadex as part of my signals group in the very near future. Keep in touch and I’ll probably also announce it on my channel. Cheers! Mike

      Reply
    1. Michael Freeman

      Hi Angela, I can totally understand but it’s better to be safe than sorry. In the USA right now, Nadex.com is the main regulated broker operating under the jurisdiction and compliant with the US CFTC and SEC.

      It’s important to mention that all EU regulated brokers are not available in the US. European regulations or any type of regulations given to a binary options broker, other than by the CFTC, is not enough for any website to offer or solicit non US regulated brokers to US traders.

      Cheers! Mike

      Reply

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