Answering Binary Options Legality Questions

advanced2-100We’re going to do something different here –

Instead of trying to break down laws and whatnot for binary options in each of the major countries, we thought it’d be better to answer common (legal) questions we found on sites like, Yahoo Answers and the more popular forums.

All the following questions and answers revolve around the legality of binary options trading worldwide.

Let’s get started.

Are there legal binary options brokers in Canada, UK, USA, Australia, India, and South Africa?

Yes, because most of these countries have regulatory bodies who oversee the binary options brokers they register and give licensing to. That includes the UK, Australia, US and South Africa.

India also happens to have a regulatory body – the Securities and Exchange Board of India (SEBI). But they do not have any licensed brokers. If they did it would be okay, though.

And that leaves Canada. Canada doesn’t have native brokers, nor do they license or regulate binary trading. But, from what I understand, it’s not illegal.

Are binary options legal?

It depends.

For traders I don’t know of a country who has outlawed binary options trading. Even though it is no different than gambling and many states and countries have outlawed casino games on some level.

It’s more black and white for brokers. Most countries have some kind of financial regulatory body who licenses, regulates and oversees financial-related companies.

But not every country has decided to regulate binary options. The United States is a good example, which is there aren’t any legal “brokers.” There is an exchange, though – Nadex. They are a licensed and regulated financial company.

Can traders be jailed, fines or prosecuted by the government for committing a crime?

For committing any crime – an actual crime? Yes.

For binary options? The answer isn’t so clear.

Trading isn’t considered illegal, to the best of my knowledge/research.

However, if you run a binary options platform without licensing or blatantly rip off your customers, then I think you could face some serious consequences.

Do you have any legal recourse in case something goes wrong?

The best thing you can do is contact a lawyer. They would have a better idea of what your options are.

That said – if you traded at a regulated and licensed broker I do imagine you’d have options. That’s one of the ‘perks.’

If you traded at an unregulated broker, though, I’d say your chances are slim as they’re probably in a different jurisdiction than you, which makes it MUCH HARDER to take legal action.

Is it legal to launch your own binary options platform?

I’m sure it is (but you’re better off asking a lawyer).

I think a better question is if it’s legal to operate a binary options platform/business in your country or state. Do they license and regulate binary options in the country you plan to accept traders from?

Is it legal to operate a binary options website?

Yes. As far as I know there’s nothing unlawful about running a website about binary options or receiving money in exchange for advertisements or for sending leads.

Do you have to pay taxes on your winnings?

In the US – I would say yes, only because I know you have to pay taxes on any gambling winnings over $500-$600. And I’m pretty sure the US government wants a piece of any money you make, no matter where it comes from.

Elsewhere – from what I understand you don’t have to pay taxes on that stuff in the UK / Europe. But it sounds like you’d have to pay taxes in Canada.

The best thing to do is keep records of the money you spend and the money you make. Then contact a lawyer and/or accountant for advice.

Are there any brokers known for breaking the law?


One that comes to mind is Banc De Binary. Back when they first launched they accepted American traders.

But in 2013 they were barred from the US and charged on several offences from the CFTC and SEC for not having a license first. They have yet to appear in court.

They do have a license from CySEC, but that didn’t stop CySEC from finding them 10k Euros after they found out Banc De Binary was withholding information.

That’s just one example – I’m sure there are plenty of others.

Is Nadex a legal broker for Americans?


They’re licensed and regulated by the CFTC. They get away with it because they’re technically not a broker, but instead an exchange.

Here’s what that means:

The main difference between Nadex (North American Derivatives Exchange) and the plethora of unregulated offshore companies which are offering binary options trading, is that the trades on Nadex are executed on an exchange at a price that the client sets.

The company is not taking the other side of the trade and is delivering the most transparent product available on the binary options market today. As an exchange, Nadex doesn’t have any interest in who the profitable party in a trade is, hence there is no conflict of interest between the client and the company.

Does legal mean a broker is safe?

This is an interesting question. I found a good answer on

Not really and here’s why:

There is a big difference between legal and regulated. Some countries don’t have many, if any restrictions or laws for people who want to run these sorts of businesses.

It reminds me of the sportsbook industry – I think it’s Cuba that doesn’t force sportsbooks to be licensed or regulated. There are no rules they have to follow. But it’s legal to operate a sportsbook from there.

And yet, it’s no surprise that’s where many of the largest sportsbook scams have originated.

So instead of focusing on legal, focus on regulated. Because a regulated broker is going to have standards to meet. They’ll have to have separate bank accounts, lots of cash flow and resources before they can even get their license.

It’s a much better way to be sure you’ll be safe trading online.