Is Forex Trading Legal in Your Country?

By Steven Hatzakis Friday, January 19, 2018

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Rather than just profit and loss, the problem can be the law when it comes to the question: is Forex trading legal in your country. Check to find out!

Introduction

Forex (Foreign Exchange) trading, if done wisely and correctly will reap the trader great profits. But before you could become a trader, there is a great number of obstacles in the way, and it is not just common challenges like capital, funding, or knowledge. Rather than that, the problem can be the law when it comes to the question: is Forex trading legal in your country?

Is Forex Trading Legal in Your Country?

It may sound easy, but really, it isn’t.
While Forex trading is completely legal in the majority of countries. If you consider the decentralized, over the counter (OTC) characteristic of FX trading, it is understandable why a lot of governments are putting all sorts of restrictions over the trade, or just slam a ban on the whole thing altogether.
All of the transactions on the market are overseen by an exchange in order to ensure that all of the transactions are legitimate and all done fairly. The most notorious one is the New York Stock Exchange at a corner of Wall Street, which has become synonymous with stock trading in general.

Now, as said, the FX market is not controlled by any exchanges. Parties interested in trading converge from all four corners of the globe, through a wide assortment of brokers would conduct trades. This is just the gaping hole that anyone with bad intentions could exploit: Without authorities in place to ensure that the transactions are legally valid and ethical, tricks and cheats can be done effortlessly – such as usury.

In most countries with a developed economic structure, regulatory frameworks (or regulators) are put into place so that lawlessness would not happen on the budding market.

The Frameworks

In the US, there are the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA). For the UK, there is the Financial Conduct Authority (FCA). For Australia, the Australian Securities and Investments Commission (ASIC), etc. along with many more frameworks out there of a multitude of countries.
Traders have to be licensed in order to legally conduct trades and transactions on the FX market. And the process of attaining a license is different from country to country.

In the US, you ought to be able to comply to a myriad of complicated requirements to be considered either a Retail Foreign Exchange Dealer (RFED) or Future Commission Merchant (FCM) depends on which type that you wish to be. That is from having a net capital of $20 million, a local office, as well as a number of obligations that the prospect trader had to follow with no questions asked.

Just by the first requirement of having a net capital of $20 million alone, a lot of people already had to give up being a trader. Such strict regulations are put into place by the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the financial crisis of 2007 – 2008.

But for other countries, the requirements – although still considerably expensive – are much more lenient. As long as you have the necessary capital and the patience for, often, years-long process of querying for a license, then you will make it as a trader.

The Ban List

But there is also a long list of countries that ban FX trade for a number of reasons. Regulators could be hostile to overseas transaction due to anti-laundering laws, bans on using domestic bank accounts, credit cards, domestic funds to conduct overseas transactions or foreign deposits.

The reasons are plenty, and their effects vary. But those ‘Bans’ don’t necessarily bar FX trade entirely. After all, FX trading is still a powerful, economical tool. Bans simply mean curbing Forex transactions, placing a multitude of conditions that traders must comply to, but generally, the trade is still allowed.

If you’re a citizen in any of the following countries, you should research much more in-depth on the associated regulations and laws:

1. Belarus
2. Bosnia & Herzegovina
3. British Columbia
4. Bulgaria
5. China
6. Cuba
7. India
8. Indonesia
9. Ivory Coast
10. Iran
11.Liberia
12. Lithuania
13. Macedonia
14. Malaysia
15. Montenegro
16. Myanmar
17. Nigeria
18. North Korea
19. Pakistan
20. Quebec
21. Romania
22. South Korea
23. Sri Lanka
24. St. Helena
25. Sudan
26. Syria
27. Ukraine
28. Zimbabwe

Final Thoughts

The world’s economy revolves entirely around the sustained flow of supplies, goods, and services. These three critical aspects are the keys to a healthy and energetic economic structure. As long as their production, consumption, and distribution are held at the highest possible rates, profits and financial security will follow for the time to come.

However, the only way for such a magnificent scenario to happen is that the transactions of values and goods internationally are up to the same standard. Profitability, international business opportunities, and settlements are universally expressed through currencies. And the trade of foreign currencies, through bouts of appreciation and depreciation of around 180 officially recognized currencies in the world, is among the most profitable business in the world.

Hopefully, now you can answer the question is Forex trading legal in your country? Thank you for reading and I’ll see you very soon!