When traders talk about “digital options” in the retail space, they often mean the same thing regulators label as binary options, fixed return options, digital 100s or all or nothing contracts. The payoff is set in advance. At expiry the contract either pays a fixed amount or it pays nothing.
In marketing copy they are sometimes sold as a simple way to trade short term movements in currencies, indices, commodities or crypto. You decide if the market will be above or below a line at a set time and stake a fixed amount. Regulators, especially in English speaking markets, now often describe this as closer to gambling than investing.
New Zealand’s Financial Markets Authority, for example, describes binary options as all or nothing or digital options that let you win or lose money by predicting short term price moves, and flags them as very high risk even for experienced traders.
Once complaints started to build up about scams, unregulated offshore brokers and persistent retail losses, a lot of supervisors stopped treating these contracts as just another derivative and moved towards bans or very tight product intervention.
Typical reasons for bans and product intervention
If you read the consultation and policy papers from regulators that banned or restricted digital options, the same themes come up again and again.
First, loss rates. The European Securities and Markets Authority (ESMA) reported that most retail traders lost money on binary options offered across EU platforms, calling it a serious investor protection problem. The losses weren’t marginal—they were widespread and persistent.
In Australia, the Australian Securities and Investments Commission (ASIC) reached a similar conclusion. Before regulatory action was taken, ASIC estimated that retail clients were losing hundreds of millions of dollars on binary options products. Those numbers weren’t small leaks—they were structural losses built into how the products were marketed and sold.
Second, fraud and misconduct. Israel saw a wave of binary options call centres operating from its territory, many of them accused of misleading or outright scamming offshore clients. That scandal was a key driver behind its legislative ban.
Third, product design. Short maturities, high implied house edge and aggressive sales tactics led supervisors to argue that many retail clients treated digital options like slot machines rather than risk managed investments. The UK Financial Conduct Authority (FCA) highlighted short maturity leading to addictive behaviour similar to gambling when it justified its permanent ban.
Those three threads sit behind most of the country level bans that follow.
Europe and the United Kingdom
ESMA’s pan European action and EU follow-up
In 2018, the European Securities and Markets Authority (ESMA) pulled the emergency brake. Using its MiFIR product intervention powers, it imposed a temporary ban on the marketing, distribution, and sale of binary options to retail clients across the entire European Union. The prohibition first took effect on 2 July 2018 and was renewed several times.
The definition was deliberately wide. ESMA classified a binary option as any derivative that pays a fixed amount if a specific event occurs and nothing if it doesn’t. That covers the classic “all or nothing” digital payout most retail platforms were pushing.
By mid 2019, ESMA chose not to extend the temporary ban. That wasn’t because binary options had suddenly become safer. It was because national regulators across the EU had already introduced, or were finalising, their own permanent restrictions that were just as tough—or tougher—than ESMA’s original measure.
Several of the restrictions show similar bans.
The United Kingdom’s permanent ban
The United Kingdom followed a slightly different route, but ended at a similar place for retail clients.
The Financial Conduct Authority (FCA) moved quickly around Brexit to make sure the rules didn’t fall through the cracks. It copied ESMA’s temporary ban into UK law so that, even after the EU measure expired, firms operating in the UK still had to follow the same restrictions.
After that, the FCA ran its own consultation. In March 2019, it confirmed a permanent ban on the sale, marketing, and distribution of binary options to retail consumers, effective from 2 April 2019. In short, for UK retail traders, the door was firmly closed, and it stayed that way.
The UK ban is wide. It applies to all firms acting in or from the UK, including those offering so called securitised binary options that had been excluded from the ESMA decision. In short, if you are a UK retail client you cannot lawfully be sold financial binary options by an authorised firm, regardless of whether they are labelled binaries, digital 100s or any other friendlier term.
You can read more about the UK ban and exactly what it covers by visiting BinaryOptions.co.uk.
Later commentary from legal and policy writers notes that UK and EU regulators have deliberately taken this hard line for MiFID style binary options, in contrast with their treatment of spread betting or gambling products that are supervised under separate regimes.
Belgium and stricter national positions inside Europe
Belgium deserves a special mention because it moved early and went further than most.
In 2016 the Belgian Financial Services and Markets Authority (FSMA) banned the distribution of certain over the counter derivatives to retail clients, including all binary options, leveraged contracts for difference and derivatives with maturities of less than one hour, when offered to consumers via electronic platforms.
The FSMA still notes that Belgium remains unusual in fully prohibiting the distribution of this whole class of derivatives to retail investors, rather than just limiting leverage or imposing conduct rules.
For a trader based in Belgium, that means digital options in the usual retail sense are not just hard to find, they are banned, whether marketed from inside or outside the country, at least by regulated entities.
Israel and the clampdown on its binary options industry
Israel moved from being a hub for offshore binary options call centres to banning the industry entirely.
After years of complaints from overseas regulators and media investigations into Israeli binary options firms accused of misleading and defrauding foreign investors, the Israel Securities Authority pushed for legislative change. In 2017 the Knesset approved a law that banned Israeli firms from selling binary options overseas via online trading.
Israel moved early. In 2016, regulators banned the sale of binary options to Israeli residents. A year later, in 2017, that ban was extended to cover sales to foreign clients as well—effectively shutting down the country’s once large binary options industry.
The Israel Securities Authority (ISA) has continued to enforce the prohibition. Recent news reports have described criminal investigations into individuals suspected of promoting or operating binary options platforms for Israelis in violation of the law. In other words, this isn’t a rule that just sits on paper—there have been real enforcement actions behind it.
From a trader’s point of view, the message is simple. Binary options, including digital style contracts on financial underlyings, cannot be legally marketed or distributed either to people in Israel or from Israel to overseas customers.
Australia and the wider Asia Pacific picture
Australia’s product intervention order
Australia chose a product intervention route similar in feel to the EU action but applied nationally.
On 1 April 2021 ASIC announced that it had made a product intervention order banning the issue and distribution of binary options to retail clients, with effect from 3 May 2021. ASIC’s analysis concluded that binary options had caused, and were likely to continue to cause, significant detriment to retail clients, including high loss rates and features that encouraged short term and speculative trading.
The initial order was set for eighteen months but in 2022 ASIC consulted on extending it, pointing to estimated retail net losses of around half a billion Australian dollars in 2018 and arguing that the ban brought Australian rules into line with those in comparable overseas markets. ASIC has since extended the order to run until it is revoked or sunsets, which in practice makes it long term policy.
For Australian retail traders, that means you cannot be issued or sold binary options by a person carrying on a business in Australia, regardless of whether they are called binaries, digital 100s or something similar. The usual offshore workarounds still exist on the internet, but those offers are outside ASIC’s licence perimeter and come with all the familiar fraud and recovery risk.
New Zealand, Japan and Singapore as contrasts
New Zealand has not imposed a blanket legal ban in the same way, but the FMA has published warnings that describe binary options as very high risk and note that they are also sold under names such as all or nothing, fixed return or digital options. Public commentary from local media even highlights the fact that these products are banned for retail clients in places like Australia, the UK and the EU but still available from offshore platforms to New Zealand residents.
Japan and Singapore chose a stricter regulatory model rather than outright prohibition.
In Japan, binary options are legal if offered by regulated brokers under the Financial Instruments and Exchange Act, with the Financial Services Agency and self regulatory bodies imposing rules on time frames and disclosure. These measures are intended to slow down rapid fire speculation and increase transparency, rather than to wipe the product out.
Singapore has taken a measured approach. The Monetary Authority of Singapore (MAS) has warned investors about the risks of trading binary options through unregulated online platforms, but it hasn’t imposed a blanket ban.
Binary-style products can still be offered through firms licensed by MAS under the Securities and Futures Act. The line is clear: if a provider is properly licensed, the activity sits inside Singapore’s regulatory framework. Offshore brokers operating without a MAS licence, however, are treated as illegal and high risk. For investors, the distinction isn’t subtle, licensed and supervised versus outside the law.
For traders in these markets, the distinction is less about whether digital options exist and more about whether they are offered by a locally authorised firm under tight rules or by an unregulated offshore website.
North America
Canada’s blanket prohibition for individuals
Canada has some of the strongest language against binary options anywhere.
In 2017 the Canadian Securities Administrators (CSA), the umbrella body for provincial regulators, announced National Instrument 91 102 Prohibition of Binary Options. The rule prohibits advertising, offering, selling or otherwise trading a binary option to an individual.
The CSA and provincial regulators have repeatedly warned that there are no registered firms permitted to trade binary options in Canada and that any firm or person selling such investments to individuals is operating illegally.
So in Canada the ban is not just aimed at local brokers. It makes it illegal to offer or market these products to individuals at all, which puts classic digital options in the same bucket as outright scams in the eyes of the regulator.
United States: narrow legality and heavy enforcement
The United States has not passed a one line statutory ban on binary options, but that does not mean the space is open.
Financial binary options linked to commodities or indices generally fall under the Commodity Futures Trading Commission (CFTC) remit. A small number of designated contract markets, such as those run by regulated firms, can list certain binary contracts, for example on major economic events or asset prices, under strict rules.
At the same time, the CFTC has brought a steady stream of enforcement actions against unregistered offshore platforms offering event based or financial binary options to U.S. customers without authorisation. A well known example is the 2022 order against Polymarket, where the CFTC found that it had been operating an illegal, unregistered facility for event based binary options and required it to pay a civil penalty and wind down markets.
So while the official line is not “binary options are banned”, the practical outcome for retail traders is fairly close. Unless you use one of the narrow regulated venues, any digital style platform offering you yes or no bets on prices or events is almost certainly breaking U.S. law.
India, Turkey and other restrictive regimes
India has not gone down the same MiFID product intervention route as Europe, but recent commentary from local financial firms and legal writers is clear. Binary options trading is not legal in India. The Securities and Exchange Board of India and the Reserve Bank of India do not recognise or regulate these contracts, which makes them an unapproved investment activity.
Indian residents who trade binary options through offshore websites do so outside the local regulatory perimeter and may be exposed to enforcement risk under foreign exchange and financial regulations, on top of the fraud risk and lack of recourse if the platform disappears.
Turkey has taken a series of steps against offshore leveraged trading, including forex, CFDs and binary options. As far back as 2012 the Capital Markets Board (CMB) identified several binary options brokers as committing a crime and sought to have access to their websites blocked for Turkish citizens. Later measures tightened rules on leveraged forex trading with foreign brokers not licensed by the CMB.
These moves make it very hard for Turkish residents to legally trade digital style options with offshore providers, even if some still try to reach them via the usual online routes.
Other countries follow similar patterns, either stating that binary options are unregulated and therefore not permitted to be offered locally, or warning that any firm doing so without a licence is in breach of securities law. The theme is familiar. When a product is closely linked to fraud and extremely poor outcomes, even regulators that do not issue a formal “ban” in name tend to push it to the margins.
This article was last updated on: February 17, 2026