Retail Binary Options in the European Union

At the time of writing, all EU membership countries prohibit the selling of binary options to retail clients (non-professional traders). There are also bans in place against the marketing and distribution of retail binary options. There are no EU countries where retail clients can legitimately trade binary options via regulated brokers under national rules.

If you qualify as a professional trader (not a retail trader), the retail bans do not apply. Contact your national financial authority for more information about the requirements and the applicable process. You can also find more information in MiFID II / MiFID I (Directive 2014/65/EU) regarding “professional clients on request”.

The bans target the sellers, not the buyers

The national bans within the European Union targets the sellers of binary options, not the buyers. A retail trader in a European Union country who has purchased a binary option online is not punished. Among other things, this means that individuals can report sketchy and fraudulent brokers to the authorities without fear of legal reprisals.

The membership countries bans the marketing, distribution, and sale of binary options to retail clients, but residents can still find foreign (non-EU) based websites that accept EU traders. Purchasing a binary option is not illegal, but you will not enjoy the same level of trader protection that you have when you trade with brokers licensed by a EU membership country. Picking a broker that is not licensed with the EU means trading without the protections that membership country laws and regulations builds around regulated firms, and it will load much more of the risk onto the individual. The better way to think about it is not “is it allowed” but “what happens when something goes wrong,” because that is where the difference between a properly authorized firm and other entities typically becomes brutally obvious.

A EU resident who opens an account with a retail binary options platform is stepping outside the supervised perimeter. That choice means no national financial authority oversight of the financial service firm, no local complaints path that compels a response, no investor-compensation insurance that will kick in if the broker collapses, and no product-intervention safeguards such as standardized risk warnings and negative-balance protection for leveraged trades. Cross-border legal cases remain possible, but jurisdictional complexity and varying evidence standards make it complicated.

In short, it is not illegal for a EU resident to buy a binary option, but platforms that deliberately target customers within the EU despite the national bans know what they are doing, and they have become very good at covering their asses by hiding out in lax offshore locations and operating through a mesh of shell companies. If something goes wrong, your local law system (both civil and criminal law) might not have much power to actually investigate and go after the culprits, and ensure you get your money back.

How it all started: The temporary ESMA product-intervention measure of 2018

The national bans within the European Union area are of fairly recent origin. It all began in 2018, when the European Securities and Markets Authority (ESMA) introduced a product intervention measure that prohibited the marketing, distribution or sale of binary options to retail investors across the EU. This measure was temporary, as ESMA itself could not impose a permanent EU wide ban. The idea was to protect consumers while the membership countries decided how they wanted to regulate binary options at the national level.

The original temporary ESMA prohibition on the marketing, distribution or sale of binary options to retail clients was agreed on 27 March 2018, and started to apply from 2 July 2018. ESMA then renewed the prohibition for a further three month period starting 2 October 2018, and then renewed it again from 2 January 2019, and from 2 April 2019. On 1 July 2019, ESMA announced that it would not renew the temporary prohibition further. Since it was not renewed, the ESMA measure expired at the end of the day on 1 July 2019.

According to ESMA’s records, by April 2020, all EU member states had implemented national rules at least as stringent as the temporary ESMA ban. These permanent bans have been implemented by each member state’s national competent authority (“NCA”) and the enforcement takes place on the national level.

Example of a national binary options regulation

As explained above, ESMA imposed the EU-wide, renewable, three-month prohibition on retail binaries in 2018, after finding a significant investor-protection concern. In Spain, the local financial authority largely replicated the ESMA stance when introducing the Spanish national regulation.

In Spain, the financial regulator Comisión Nacional del Mercado de Valores (CNMV) adopted a resolution on product intervention measures for binary options on 27 June 2019. On 2 July 2019, the Spanish ban on the “marketing, distribution or sale to retail clients of binary options” came into force.

The CNMV’s explanatory material underlines a central premise: short-term, all-or-nothing payouts and pricing asymmetries make binaries unsuitable for most retail users and closer to a game of chance than to a genuine investment product.

Because binaries is known to be such a popular lure for sketchy brokers, Spain has coupled the 2019 ban with broader action on high-risk-product marketing to consumers and on unauthorized financial services firms (“chiringuitos financieros”).

If you are retail client in Spain, a firm offering you binary options is breaching Spanish rules. Typically, these retail binary options platforms are based in lax jurisdictions where they will not face any consequences of actively targeting consumers in countries where it is banned. The CNMV’s resolution explicitly bans not only sales but also marketing and distribution, and it prohibits “elusión” (attempts to circumvent the rules), so schemes that route orders via intermediaries or dress binaries up under different labels fall within scope. In short, the compliant retail menu in Spain does not include binary options.

The CNMV’s measure applies to any entity serving Spanish retail clients, whatever the passporting route, and to Spanish firms when they sell into other EU states. If a Spanish client is targeted, the stricter rule applies when measures differ between member states. In practical terms, this closes the most common cross-border loopholes and allows Spain to act against promotions that originate abroad but aim at residents via the web, social media, affiliates or call centers. If you see a website or influencer marketing binary options to Spanish consumers, the activity is taking place outside the authorized perimeter, and the usual risks can be expected, including blocked or stalled withdrawals, bonus traps, price feed tampering, and misuse of identity documents.

EEA countries and the marketing, selling, and distribution of binary options to retail clients

The European Economic Area (EEA) brings together the countries of the European Union plus three of the four European Free Trade Association (EFTA) countries – Norway, Iceland, and Liechtenstein – under a single market with the same financial-services rules (including MiFID II/MiFIR). The fourth EFTA country, Switzerland, is not a part of the EEA, and has its own separate financial-regulatory framework.

Norway

On 2 January 2020, Norway formally notified ESMA under Article 42 MiFIR that it was adopting a permanent national product-intervention measure. ESMA issued an Opinion (ESMA35-43-2172) confirming that Norway’s measure was consistent with EU law. From January 2020 onward, the prohibition became a standing national measure in Norway, replacing the earlier temporary alignment with ESMA.

Iceland

The regulator Fjármálaeftirlitið (Financial Supervisory Authority of Iceland) issued an interpretation on 5 July 2018, and updated it on 28 August 2018, stating that the marketing, distribution or sale of binary options to retail clients is regarded as contrary to proper and sound business practices under the Securities Transactions Act No. 108/2007.

Liechtenstein

The regulator Finanzmarktaufsicht Liechtenstein (FMA-Liechtenstein) issued a General Ruling which states that the “marketing, distribution and sale of certain binary options to non-professional investors in and from Liechtenstein is prohibited”. This measure took effect as of 1 February 2025, when the general ruling replaced the previous basis, with the material content remaining materially unchanged. The measure is aligned with product-intervention powers of the EEA under MiFIR mechanisms, consistent with EEA regulatory standards.

When EU Retail Clients Trade Binary Options Online

As explained above, EU residents can still reach and use binary options platforms online, and the individual is not committing a crime by purchasing a binary option. Still, it is a very bad idea, because you will be operating outside the trader protection framework established within the European Union.

Platforms that deliberately target and accept retail traders in countries where there is a ban in place know what they are doing. You are therefore unlikely to find a platform based in a non-EU country where binary options are well regulated and offered with strong trader protection rules in place, because those countries do not appreciate when brokers licensed by them break the rules in other countries. Instead, EU residents typically end up with platforms based in very lax offshore jurisdictions where binary options brokerage companies operate with minimal supervision and where trader protection is very weak.

Because of this, the risks stack: a lack of supervision, a lack of transparency, weak custody rules, withdrawals and be stalled or denied without legal consequences, poor statements for tax, banking friction, identity-theft, and almost no practical help available in a dispute.

If you want to gain exposure to the financial markets, there are supervised instruments and entities available in the EU that allow you to do so with clearer rules, stronger trader protection, and real recourse if something goes wrong. Choosing the unsupervised path may feel like a smart move, but you are exposing yourself to problems that can take longer and cost more to fix than any welcome bonus was ever worth.

Opaque ownership situation

A deliberately opaque ownership situation is one of the problems that clients are facing with many of the retail binary options platforms that still accept EU clients. When a brokerage company is licensed by a EU membership country, you will receive information about the exact legal entity that is your counterpart and holds your account, and you will know where client money sits and under which rules There will be a firm reference number in the public register, and you will know which activities the company is approved to perform. With a binary options platform operating from a lax jurisdiction, ownership and custody tend to be much more opaque.

Custody

A broker licensed by a EU membership country must segregate client money from company funds and reconcile balances daily. Platforms in lax jurisdictions are much more likely to pool deposits, mingle client money with company funds, move client money across processors, and change banking partners without notice. If those funds are frozen by a correspondent bank or seized during an investigation, the platform can vanish while you have no recognised claim in the system that holds the cash since there was not segregation of funds. This will also come into play if the company becomes insolvent.

Blocked and stalled withdrawals

There are many platforms in lax jurisdictions that will work great until you have actually built up your account balance and wish to make a withdrawal. That is when you realize that they intend to keep your funds, or at the very least make it very slow and complicated to withdraw them. A few examples from reports:

• The platform hands out bonuses with opaque conditions. When you try to make a withdrawal, you realize that your account is frozen until you have fulfilled exorbitant trading requirements. If your balance is dwindling as you strive to fulfill the requirement, you might even feel pressured to make yet another deposit, and this is when you start “throwing good money after bad”, as you refuse to cut your losses.
• The platform is asking for identity and residence verification documents that go far beyond what is required by law. A certain degree of verification and know-your-customer (KYC) is to be expected with any broker, but sketchy brokers start throwing exorbitant requirements at you the moment you want to make a bigger withdrawal. Suddenly, no document is good enough, and they can also claim your funds have been locked by local or foreign authorities.

Identity-theft

Remember all those documents, face-time videos, and more, that you had to send in while you were attempting to unfreeze your account and make a withdrawal? Perfect for a fraudulent broker who needs you identity for other scams.

It is tempting to think that taking a risk with a binary options broker is okay, since you can´t lose more than your €100 deposit. Sadly, the risks are much higher than this, as you can find yourself enmeshed in a legal case because your identity has been hijacked by the scammers, and even if you are completely innocent, clearing your name can take a long time. You do not want a sketchy broker to have your passport and ID-card scans, utility bills, signature, and selfies, because with all this information in the wrong hands, the damage can go well beyond your account balance.

Price-feed manipulation and execution opacity

When your broker is also your counterpart in a trade, the broker profits every time you lose, and vice versa. This system can work well when the broker is supervised by a strict financial authority. When your broker is in a lax jurisdiction, this built-in conflict of interest can turn into a serious problem, as your broker has strong incentives to manipulate the platform to ensure you lose certain trades. Price-feed manipulation and execution opacity are well-known issues, but they can be exceedingly difficult to prove. Without best-execution duties enforced by a financial authority, price feeds can freeze at convenient moments, prices can be manipulated, executions can be delayed, and dispute logs might stay internal or be changed before release.

Banking, tax and AML side effects

Transferring funds to an unlicensed broker can trigger reviews at your bank, particularly if the merchant code or payment route trips monitoring rules. Repeated card disputes or suspicious wires risk account closures or inclusion on internal watchlists. If cryptocurrency rails are involved, exchanges may flag flows as high risk, leading to holds and enhanced due diligence that consumes time and patience.

If a platform is later linked to fraud, money laundering or sanctions breaches, you may need to evidence source of funds and purpose of payment to avoid being swept up in a wide inquiry.

On the tax side, gains turning up in your national bank account within the European Union can cause friction, especially if combined with a lack of proper broker statements.

Advertising, affiliates, and misclassification games

Many binary options brokers reach out to potential clients in the European Union through influencers, signal sellers and affiliate funnels. The sales pitch often promises fast withdrawals, “EU compliant” status, or “education first” programs that end in the same cashier page. Another tactic is to internally reclassify clients as professional to bypass retail protections, or to label binaries as “fixed-return contracts” to make them sound compliant. In practice, a change of product name or internally claiming a client is professional is not enough to circumvent the law.

Any request to waive recourse or accept forced arbitration in a distant jurisdiction is a clue that the platform understands the risk to itself and is attempting to parcel together a shield in the small print. The same is true of any claims that marketing is not aimed at EU retail traders when a platform is still happily accepting sing-ups and deposits from EU retail clients.

Recourse when things go wrong

Of course, even without a financial authority in your corner, you can always file a police report when you are the victim of a financial crime such as fraud. And you can also hire legal representation and open a civil claim in the country where your broker is based. But what are your chances of actually getting your money back through these routes, and how much of your time, money and energy are you willing to invest?

Winning a legal case against an offshore broker is not impossible, but it is typically very slow, expensive, and uncertain. With a civil case, you might end up dealing with things such as service of process across borders, arguments over jurisdiction and governing law, and a defendant that may be a shell company with no assets in reach. Whatever the broker has done to you might not even be against the law in the lax jurisdiction where the company is based.

Even if you do manage to obtain a judgment in your favor, the saga is not over, as recognition and enforcement in the broker’s home country can stall for months or years.

Payment processors and correspondent banks are sometimes a more practical pressure point, yet they will usually not act without compelling evidence and clear breaches of their own terms. It is one thing to claim that withdrawal that were made three days ago was fraudulent and need to be reversed. It is a very different thing to report that you willingly sent money to a broker in an offshore paradise six months a ago and is now fighting the exact contents of their bonus conditions.

Recovery Scams

Recovery outfits that cold-call or message after a loss offering to retrieve funds for a fee are not uncommon. If you agree, you become the victim of a new scam.

Many fraudsters will sell your information once you have been the victim of a scam, since they know you might be eager to enlist the services of someone who pretends to be in your corner. Others do not even bother to sell on the information, they simply keep the recovery scam in-house.

What should I do if I already opened an account with a retail binary options seller?

Document every interaction, capture full statements and the current terms of business, and contact your bank quickly if a card dispute window is still open.

Immediately stop funding the account, and realize that you might be approaching a point where you need to cut your losses, both financially and when it comes to time and energy. Never make additional deposits trying to fulfill any trading requirement or to gather evidence, and do not provide more identity-theft fodder.

Request a small withdrawal to test the path, as a big request can be more likely to trigger an account freeze. If the small withdrawal goes through, you might be able to gradually empty your account. Not all brokers are sketchy, and there are also sketchy brokers that will attempt to play the long-game, and might not wish to reveal themselves if they think you are still likely to return with new deposits in the future.

If platform support insists you must meet turnover tied to a bonus, ask them to point to the exact clause and timeline. If the clause is missing from the version you saved, say so clearly. They do not care, but you are building a file for every audience that might help later, including your bank, the processor, the regulator, and if needed a lawyer.

Filing reports with your local financial authority and with law-enforcement creates records that can help processors connect cases. It will not guarantee recovery, but it can be useful information for the authorities to have.

If the broker has made claims or provided misleading information about being authorized to sell retail binary options within the European Union, report it to the applicable financial authority. Some fraudsters will for instance claim to have a CySEC license, and CySEC wants to find out about them and warn about them on their official site.

You can also file a report with the applicable non-EU financial authority who (truly or allegedly) is supervising the platform. Some authorities are better than others when it comes to handling foreign trader reports and resolution requests. And once again, it is not just about the recipient. It is also about building a file for every audience that might help you along the way.

Don’t engage with any “recovery” or “chargeback service” companies that contact you, because that is very likely to be a scam.

This article was last updated on: November 20, 2025