Future binary options regulations and lawsuit


So, why are binary options so popular and compelling in the first place? First of all, they offer great diversity and investors can literally bet on any financial product.

Traders can purchase binary options at any time of the day. Additionally, the time frame for binary options expiration can be from 1 minute to days. If binary options sound like a fantastic way to win big on Forex market, being easy, accessible, and diverse, then why was its worst year ever? The future of binary options trading may become less certain. Many changes are expected to happen in The reason for the crisis on the binary options trading market is that CySEC the Cyprus Securities and Exchange Commission had left way too many loopholes with its lax regulations.

This resulted in clients closing accounts. It seems that innovation and transformation can be the key. Some innovative companies have seen where this is going and are now focusing their attention on exchanges and gaming.

Exchange traded binary options are very similar to the investment instruments in Japan and the U. The main challenge is that clients will have to be trained to know how to best operate with these new products. This would mean more investment on the side of the companies, more customer support, and trained service staff. The learning curve is there, and traders will need to go through it first to be able to comfortably operate the new product. Other companies are introducing the concept of gaming.

Instead of making trading a boring and tedious task to do, gaming can help attract new clients. In the end, no one can predict with certainty what the future of binary options will be.

January edited January I was doing some research into this same issue and came across this forum discussion. I thought the following article which is quite recent last month was really interesting as well: While it has been pointed out that there is one CFTC regulated binary options exchange in the USA namely Nadex, I think it is important to note the fundamental difference between Nadex and the typical binary options platform.

Whereas with all the other binary platforms I am aware of you are trading directly against the house and they have to honor the trade once you click to buy it, the trades are on offer and you can enter your trade whenever you are ready and they have to take your trade.

This is far superior from my perspective. I think this is also key for the whole US legality aspect as well. Because if it is just fixed odds betting as some regulators now hold that it is Isle of Man, UK, Israel, etc. The illegal online gambling is defined by law in the US to cover casinos, the actual law refers to a prohibition on gambling on games of chance. It is in court in the US currently whether things like fantasy sports and poker are games of chance, I do not think anyone will say that movements of forex and stocks are games of chance and I can only imagine the mushroom cloud that would erupt over Wall Street if a US court ruled the world stock markets and forex were all just down to luck and chance!

Lol This debate about whether binaries will be regulated as financial or gaming seems to be going in the direction of gaming. I think that the City of London and the UK regulators are looked at as the leaders of Europe and are leaning this way. The Isle of Man is part of the British Isles and has already decided the issue. I tend to agree based on the facts: Since binary options first became available in the US in , traders have shown a considerable amount of interest for this relatively new form of investment.

The binary options industry experienced a boom in the later part of , as traders from every corner of the country wanted to learn and participate in this type of trade. As a result of the financial crisis experienced by the United States in , the financial securities market has greatly evolved over the years, and some critics would say it has become very restrictive, especially in terms of binary options.

Despite this, the US is one of the few countries in the world to have a very solid regulation structure in place, which assures the utmost protection for traders by adding many security layers.

Some view this as limiting, but most investors feel confident in investing in binary options due to how closely monitored the market is. The legality question of binary options in the US has two layers. The first consists in whether binary options brokers from the US can operate in accordance with the federal and state laws; the answer is yes. The second layer involves traders and whether they can lawfully start trading options; the answer is yes to this as well.

The US history of binary options shows that over the counter transactions were popular at first when there were very few regulations in place. A few years later, the Options Clearing Corporation OCC started regulating all over the counter operations in order to keep a closer eye on buying and selling activities. Anyone who would stray for the rules would be banned from trading options, either temporarily or permanently, depending on the severity of the breach.

Blue Sky Binary Posts: Hello, Binary options are legal in the sense U. S citizens won't be jailed for trading them. S clients for the trading of binary options is illegal. The last time a company active in traditional binary options tried to solicit U. S clients, they were deported. This company was called Banc De Binary. Signal Hive - The No. There is a lot of confusion caused by the term "binary option" being used by two very different kinds of platforms.

Most binary platforms are the second kind and are not an exchange operation at all, instead you are playing a real money game against "the house". The asset pricing comes from the real financial markets, granted, but that is not the same as buying an actual option like on Nadex. When you buy an actual option you have an actual right to take delivery of it or if the seller an obligation to deliver it up.

The fact that in The UK correctly regulates this product under gaming. The only place that has said these operations would be regulated by a securities or derivatives exchange regulator is the Cyprus equivalent to the CFTC: Cyprus Securities and Exchange Commission which is only misleading consumers. I am not aware of one company in Cyprus that is operating an exchange like Nadex. Rather you are playing a game against the house.

No option is in fact being sold. So the UK government is right. Under US gaming prohibitions casinos and sportsbooks are illegal but there is absolutely no prohibition against binary betting on the outcomes or performances of the world financial markets.

For gaming legality comes down to whether it be a game of skill legal or a game of chance illegal. Betting against the house does not constitute trading in derivatives. The end result is that whether a given binary company is legal in the USA or not will depend on how they have gone about regulating and marketing their product.

If they operate a game against the house and market it as such with a gaming license then they are not in any way afoul of US laws under games of skill as they currently stand.

Alternatively if they are operating an exchange or selling derivatives which is something entirely different then they must be licensed by the US financial regulator, the CFTC.