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The News God > Blog > Business & Finance > Where is Forex Trading Illegal?
Business & Finance

Where is Forex Trading Illegal?

Rose Tillerson
Rose Tillerson November 12, 2021
Updated 2021/11/12 at 2:39 PM
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6 Min Read
Where is Forex Trading Illegal?
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Forex is one of the largest markets where billions of dollars are circulated every day. No wonder it is the most popular form of trading compared to stocks and cryptocurrencies. With the development of this market, more and more people became interested in this activity and right now the number of customers is increasing sharply.

However, while there are a lot of brokers, not every country allows customers to trade Forex, as there are numerous restrictions. Even where Forex is considered to be a legal activity, restrictions still persist, making it difficult for people to continue the trading process. In this article we will have a look at some countries where Forex is illegal and possible reasons why a particular state might consider banning trading.

India

Only registered exchanges in India can allow retail trading. In general, for Indian customers, it is only allowed to trade with the national currency. Otherwise, trading is not allowed, which puts people in an unusual situation. For example, trading USD-GBP, EUR-GBP is not permitted. It is pretty close to being illegal.

North Korea

No wonder, Forex trading is not allowed in North Korea, because the country is perhaps the most secretive place in the world. Little information is available about everyday activities, and there are no Forex brokers in the country, which people can use. There is no way for ordinary people to engage in trading. The financial situation is tough and almost every field is under the state’s control. If we were to pick Forex trading legal countries where Forex is allowed and every customer can turn to this activity, then North Korea would be the complete opposite.

China

China is another country, where Forex trading faces a lot of restrictions. For example, it is not allowed to trade with foreign brokers and investors can only register with Chinese ones. The country has one of the strongest regulations when we talk about FX trading.

Turkey

According to the regulations in Turkey, which has come into force relatively recently, people are not allowed to trade with foreign brokers. At the same time, there is a restriction on leverage, and the maximum leverage must be 1:10.

Why do Countries Restrict FX Trading?

As we were talking about some countries where Forex trading is restricted or considered illegal, it is necessary to have a look at the possible reasons behind declaring FX trading as an illegal activity.

Safety

For a lot of countries and even people, Forex trading is similar to gambling. It is one of the riskiest activities you can be involved in and the chances of losing money are high. However, like gambling, you can earn a lot of money in no time. Because of that, states impose numerous restrictions on Forex trading to avoid such complications. Accordingly, where FX trading is illegal, gambling also follows the same pattern. Governments make regulations so that people avoid investing money in something, which would result in the loss of money.involved

The safety of citizens is considered a priority for many countries. While from a libertarianism perspective such an action might draw notable criticism, it is not the case with the countries that we have mentioned above.

Sharia Law

The majority of countries where Forex trading is illegal or restricted practice Sharia law, which is a set of rules, where trading is not allowed. If we were to have a look at countries like Malaysia, Saudi Arabia, Iran, all of them follow Sharia laws and there are not many traders in the country. Those who are engaged in trading register on specific Islamic accounts that offer swap-free trading.

Fixed Currency System

There are 2 types of currency systems in countries: floated and fixed. In the floated currency system the exchange rate is determined by supply and demand, while in the fixed currency system, countries try their best to maintain the same rate by imposing regulations and restrictions. Because of that a lot of states are considering regulations and strict laws on Forex trading so that they can avoid complications.

The Bottom Line

While Forex trading is indeed a popular activity among trades, not every country follows the same set of rules and they differ accordingly. It is necessary to understand first where trading is prohibited, before you decide to choose a broker and then to continue with your plans.

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Rose Tillerson November 12, 2021
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