Are Binary Options Legal in Cyprus?
If you live in Cyprus and are interested in the topic of binary options, you are probably wondering if this financial instrument is legal in your country. You’ve come to the right place. In this article, we will explain the legal situation of binary options. Below is a list of recommended brokers. By opening an account with a suggested broker, you reduce the risk of being scammed.
What do you need to know?
According to ESMA
First, let’s look at the regulations coming from the financial market regulator in Europe. ESMA is the body that introduces regulations and cares about the safety of customers. In 2018, ESMA banned binary options, suggesting that it is a gambling-based instrument. Interestingly, the Dutch court believes otherwise and stated that binary options are not gambling because they are based on financial markets, the skillful analysis of which can lead to a market advantage that cannot be obtained by gambling. ESMA, instead of regulating binary options, concluded that it would be much easier to ban this instrument.
As a result, brokers based in the European Union cannot offer binary options. The ban applies to brokers, not clients. This means that if you find a broker that offers binary options, you can register with him and invest legally. The broker in question may not have any affiliation with the EEA and may not run a promotional campaign in Europe.
Deposit Problems caused by ESMA Intervention
The ban on binary options in Europe caused many companies to stop cooperating with brokers who offered binary options. This also applies to brokers who are not based in Europe. The problem is very serious as it concerns the available payment methods. Few brokers offer the option to deposit with Visa or Mastercard. Therefore, if you are interested in binary options, you should have an internet or crypto wallet prepared. These wallets are available from every broker and allow you to make transactions quickly and safely.
In our opinion, Coinbase will be the best choice. If you are looking for a crypto wallet that will allow you to quickly fund your account with any binary options broker, choose Coinbse.
A way to trade safely in Europe
Not many people know about it, but ESMA has not banned binary options for everyone. If you meet the relevant conditions, you can apply for the status of a professional client and legally get access to binary options from a certified European broker. Few brokers offer this option because the conditions you have to meet are strict. You must meet at least 2 of the following 3 conditions:
- Trading volume – You have carried out at least 10 transactions in CFDs or Options (each worth €150 or more) per quarter over the previous 4 quarters
- Sizable portfolio – Your financial portfolio — including financial instruments and cash — exceeds €500,000
- Relevant experience – You have at least one year of relevant experience working in the financial field
If you have no experience in the financial industry, the “easiest” way is to meet the first two conditions. You must have a minimum of €500,000 in your account and for the next year open a minimum of 10 transactions per quarter for a minimum of €150. And when you meet these requirements, you can easily submit an application to the IQ Option broker. All you need to do is verify the transactions and show a confirmation from the bank that your assets exceed the above-mentioned amount.
Is binary options trading safe in Cyprus?
It is definitely not as safe as it was before 2018, when the brokers had European certificates. Currently, brokers who legally operate “in Europe” cannot have any serious licenses because this would automatically prevent them from offering binary options in the European Union. That is why most brokers are based in the Caribbean and at first glance it does not look very good. There are many dishonest brokers out there and you have to be very careful when deciding which broker you want to work with. That is why we always recommend users to choose brokers from our list – they are proven platforms with extensive experience.
It’s been a while since 2018, many platforms have emerged, and a few of them are really promising. Brokers who have multiple clients have no interest in defrauding the clients. These are serious companies with hundreds of employees and their reputation is very important to them. After all, you won’t choose a broker with a lot of negative reviews, right? The most dangerous are companies that were established relatively recently and there is really no way to find out if the broker will not be a fraud in the long run. Therefore, we recommend choosing experienced brokers.
What if you get scammed?
Unfortunately, in most cases, there is nothing you can do about it. Lack of regulations and companies registered in the Caribbean make any legal proceedings very difficult. This is the biggest disadvantage of investing in binary options being a resident of Europe. ESMA by introducing a binary options ban did not make people stop being interested in this topic. This has led to a situation where customers have to register with poorly regulated companies in order to be able to access the instrument, which has been available in Europe for many years. If, according to ESMA, binary options are gambling, why not classify them as gambling? Following this line of reasoning, all companies offering any kind of gambling should be banned.
So let’s summarize what you should know from this article. First of all, remember that binary options are officially banned in Europe. Second, remember that the ban only applies to companies. You as a client can choose a broker from outside Europe and invest legally. Third, you have to reckon with the fact that in the event of an attempted fraud, no one will be able to help you. However, if you choose a good broker, you shouldn’t worry about scams. Therefore, choose one of the brokers we suggest to make sure you choose well.