Is Trading Binary Options Legal?
Binary options are prohibited in the European Economic Area.
Financial investment and trading opportunity are, in some way, old as the human society itself. Trade has always existed and the new age we live in today has only added multiple opportunities to people to generate profits. And not necessarily following the traditional routes.
Binary options trading is one such opportunity which became available on the global market in 2008. In fact, it was the Chicago Board of Exchange which made the groundbreaking decision to make this type of online trading accessible to the masses.
It is hardly a surprise when one considers the numerous advantages which binary options trading offers. From affordable investment which does not require that traders already have a hefty bank account to simple and straightforward trading process which ordinary people can quickly learn and apply to make a profit.
However, there is also an important question which all who wish to participate in this form of trading eventually ask – is trading binary options legal?
This too is not a surprise, as traders still view online trading ventures as suspicious as the investment is not done in the traditional manner.
This article will address this issue as well as several other which are important for a successful binary options trading experience.
Is it Legal to Trade Binary Options?
The simple answer is – yes!
Binary options trading is a legal online trading opportunity which has opened up a world of profitable options. On the other hand, every country is a separate and unique story which has a different legal approach to trading binaries. What we strongly advise to prospective traders is to acquire about the laws which apply to binary options for their resident country and proceed according to the information given to them by those who are experts in the field.
The question of the legality of binary options trading inevitably brings about the question of taxes as well.
This also indicates the importance of information when it comes to trading binaries in general, and about the more precise issues of law and taxes.
The very mention of the word tax is often enough to make people shudder or to evoke an impromptu headache. The fact that every country has a different and very specific tax policy does not make the whole situation any easier.
Additionally, as every country sees binary options trading differently this aspect of gathering relevant information becomes of crucial importance.
Yet, there is at least one basic and simple fact connected with tax which is universal – tax has to be paid if the profit is made. The best approach is to contact a professional who is an expert when it comes to taxes and seek further information on the matter.
Binary Options Regulatory Authorities
Further help in answering the question is binary options trading legal is to also be familiar with regulatory authorities which issue regulatory licenses to binary brokers.
One of the well-known regulatory authorities is CySEC (Cyprus Security and Exchange Commission), FSA (Financial Service Authority) in the UK, FSB (Financial Services Board) in South Africa, CFTC (US Commodity Futures Trading Commission) as well as CONSOB in Italy.
This stresses the importance of selecting binary options brokers which have a regulatory license as opposed to those who do not. However, this can be a slippery-slope area which we will further address to clarify and help all interested traders in their decision-making process.
Regulated vs Unregulated Binary Brokers
While we have already pointed out that trading binary options is legal, there are steps binary options traders should take to make sure they are dealing with an established broker. Those binary brokers who have obtained a regulatory license are under the obligation to follow the rules which are put forward by the regulatory agencies and in doing so immediately inspire more confidence in traders.
On the other hand, those binary brokers who do not have a regulatory license are not immediately a scam as there are many brokers who conduct a fair, transparent business.
Yet, it is always better to opt for a regulated broker as they are also required to conduct transparent business in terms of prices.
Hence, the popular brokerages such as Ayrex or HighLow could be a great choice for interested traders. These brokers are not only regulated but have a longstanding global market presence and numerous satisfied traders.
Security Measures on the Trading Platform
Hopeful binary options traders need to bear in mind another important segment – security measures introduced by the broker. In most cases, the SSL encryption technology is used which protects all the personal and financial data exchanged between traders and the broker. It is easy to check if the broker uses proper protection by simply inspecting the URL area. A small green padlock and HTTPS letters should be plainly visible as those indicate that the platform is protected.
Naturally, traders are also advised to carefully read the information available on the broker sites and contact customer support service to ask any additional questions concerning safety measures. It is also good that the binary broker follows the so-called KYC policy (Know Your Customer) which means traders need to submit additional documents such as the copy of the photo ID, utility bill or bank statements as the proof of address as well as the copy of the credit card.
This is done to further protect traders against identity theft, money laundering, and fraud. This also points traders are dealing with a serious and dedicated binary broker.
We also have to stress the importance of carefully reading through Terms and Conditions section which every binary options broker needs to have clearly displayed on their trading platform.
Yes, this may be a longish and laborious process for the interested traders but it is a necessary one.
Every financial investment carries a certain risk of loss. In fact, there is no such thing as a risk-free investment, either in binary options trading or any other trading venture. This does not mean that traders are dealing with an illegal business proposition. After all, millions of traders around the world are taking part in trading binaries hence it would be very hard to do so unless binary options trading was not legal.
The key point is that potential traders first have to make sure they have all the facts and essential information about the legal status of binary options which apply in their country of residence.
Equally important is to inspect the binary broker regulatory status and security measures enforced on their trading platform.