So, is Forex Trading Legal in the United States or Not?
Yes, forex trading is legal in the United States! Don’t let anyone tell you otherwise.
It’s true that forex trading often gets a bad name. There’s no denying that there are plenty of scammers, unregulated forex brokers and so called forex educators that really have no business in calling themselves what they do. But whether it’s the right choice for an individual forex traders to get involved themselves is an entirely different question to is forex trading legal in the United States. Just keep in mind that personal choice is a big part of being an American and having the right to choose where to trade forex, while it has been limited in recent years, still contains personal choice.
Forex isn’t traded on or controlled by a central governing body such as a stock market or futures exchange. This means that the volume doesn’t go through a central party, it is decentralised meaning that all forex traders end up trading with each other based on credit agreements. It is because of this decentralisation, that forex trading can’t be entirely outlawed by making it illegal anywhere, let alone in the United States.
Forex Regulation in the United States
While forex trading is not illegal in the United States, it is however HIGHLY regulated in that particular jurisdiction. In the United States, regulated forex brokers are regulated by the Commodity Futures Trading Commission (CFTC) and must be a member of the National Futures Association (NFA).
Following the Commodity Modernization Act in December 2000, forex brokers who wanted to target United States forex traders in their marketing and keep them on their books, they were forced to register with these above regulators to stay compliant. This has meant that if a foreign based forex broker is unable or unwilling to gain the appropriate US forex regulations then they are unable to accept US forex traders.
This of course has been a huge game changer for the forex trading industry due to the fact that the United States is such a large part of the industry and a huge marketing opportunity that many fairly regulated forex traders can no longer access. For example, UK forex brokers regulated by the FSA and Australian forex brokers regulated by ASIC are both highly trusted regulatory bodies but are now unable to accept clients from the United States.
This regulatory change doesn’t only have a detrimental effect on forex brokers, but also on individual traders who are now severely limited in their choices when it comes to choosing a broker to trade with.
The endless battle between protecting people from their own bad decisions and allowing personal choice rages on.
Where to Trade Forex in the United States
If you’re a forex trader in the US, you are severely limited in your choices when it comes to selecting a forex broker. You can choose to trade with one of the few remaining NFA regulated forex brokers, or you can choose an offshore regulation that has defied the US regulatory body’s decision and still accepts forex brokers.
We don’t believe that FXCM is safe and with the rest of your home grown choices being market makers, we instead recommend US traders trade with our best United States forex broker award winner, FX Choice.
Make sure you use one of the buttons below to sign up to an account with our award winning United States Forex Broker and avoid any problems that you might possibly face with using another forex broker.