Can US residents trade fx offshore? | Forex Factory

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Can US residents trade fx offshore?

  • #1
  • First Post: Oct 20, 2010 9:29am Oct 20, 2010 9:29am
Are permanent U.S. residents permitted to open individual retail accounts overseas still? I am talking on the phone to the same broker and sometimes when I call, a representative says yes, and sometimes when I call a representative says no. What's the deal? However, they all pretty much agree that U.S. residents cannot open a UK account and usually recommend a New Zealand account or some other country.

I know that the CFTC has not banned U.S. residents from trading overseas, yet since I have called the CFTC directly and they have responded that individual U.S. residents are permitted to trade fx offshore. So why are we having problems now? Is it broker policy? The FSA? Whats the deal? If I open a corporate account with any of these brokers by the way I am fine and there is no hassle. Which offshore brokers make this transition facile and painless? I think it would greatly benefit many traders to list the offshore regulated brokers that accept U.S. residents.
  • #2
  • Oct 20, 2010 10:27am Oct 20, 2010 10:27am
Hi,

I also welcome some additional thoughts/opinions on this. Here are a few things that I do know...

US brokers (FXDD, IBFX, etc.) who wish to maintain their registry with the CFTC must not allow US residents to have offshore accounts that can bypass the new margin rules. So this appears to be the reason why when I ask FXDD if I can open an account in FXDD Malta, they inform me that supposedly a US resident can't have an offshore account at all. I'm a little suspicious, and i believe that they bend the truth so that they won't lose customers, when we all switch to brokers that aren't regulated by the CFTC.
I've scoured the following pages and am having trouble locating the laws regarding US residents and offshore accounts. The CFTC does not have jurisdiction over FX dealers that aren't regulated by them. What are they gonna refuse the tax money that we pay because we made that money at an offshore brokerage?

http://www.cftc.gov/LawRegulation/index.htm

http://www.cftc.gov/ucm/groups/publi...nalrule_qa.pdf

but what do I know? Please if someone has some legal knowledge or advice please state it here.

pangufx
  • #3
  • Oct 20, 2010 2:35pm Oct 20, 2010 2:35pm
I almost started a thread on this yesterday. I'm looking for a new broker, not to totally replace one I have but I just want more flexible funding, lots, option to do micros etc. I need a second one(or maybe I'll open them both, one has no min funding requirement so why not??) I'm deciding between a US one and one not in the US. I am not doing it solely to trade 50000:1, as my price per pip will always be the same unless I find I'm some sort of wizard(and buy the hat). But it would be nice to have less equalty used so I can do maybe...2 trades at once. It just so happens they are overseas.

I can't think of any precident to say I can't though. It's a regulatory body, not a legal law. This would be like asking can I buy chinese products over the internet because they do not follow US OSHA and EPA laws. A regulatory body can say company X can't do this, but they don't say that comrade citizen can't buy Z correct?

Am I thinking about this the wrong way?
  • #4
  • Oct 20, 2010 8:53pm Oct 20, 2010 8:53pm
From my feeble understanding in all this there is nothing illegal in and of itself by trading with an offshore broker.

The only thing that makes it illegal is if the broker in question has a direct link to the CFTC, meaning they are registered with them OR the regulating authority that regulates your particular broker has signed an MOU [memo of understanding] presumably to "TRY" to stop you from being able to open an account.

There is nothing that I have read or could find that the CFTC will come after you personally. The premise in the way the law was established was to cut-off the access to the "drug". IE Leverage

In the end it comes down to what the broker thinks they can or can't get away with depending on the regulating authority that sets the rules they follow. Some may fear losing what they have if the CFTC were to some how influence an LP / Bank they use for liquidity or whatever to try to get them to turn US residents away.

There is big money at stake and it's a fight that will likely face lawsuits sooner or later by big firms that set out to protect their turf. Most of this big money threat is the American based futures market. They see how fast forex is growing and they feel threatened. Poor gize.

The world is a big place and certain brokers are beginning to grow a thick skin and the proverbial balls that go with it to stand against the CFTC ruling.

Actively soliciting american clients is one such no-no that has been stated in the verbage of the law. In the end I think this is one such loop hole that exists because if you sign with one of these supposed brokers, they can easily say "I didn't solicit him, he came to me of his own free will and I run a legal entity outside your jurisdiction."

Which is partly why I don't come out and say who or what you should trade with. Seek and ye shall find, knock and it will be opened unto you.

If they claim you are trading foreign exchange illegally, you can use their own verbage against them in that you are NOT trading on an actual exchange. The broker is your counterparty to all trades. SO, If I am not trading on an actual exchange then I'm not ACTUALLY trading forex am I?

They didn't stop alcohol with prohibition and they have an even bigger chore with forex.
  • #5
  • Oct 20, 2010 10:52pm Oct 20, 2010 10:52pm
The funny thing is, the government has no problem with you blowing your money on Lottery tickets or at Casinos, but high leveraged Forex trading is suppose to be somehow....super evil.
Binary Options Trader
  • #6
  • Jan 29, 2012 3:51am Jan 29, 2012 3:51am
Well, that's because forex trading actually can produce a long term income while betting on Red or Black at the casino only puts money in the pockets of the big boys. God forbid that someone become a self-made millionaire or even billionaire! It's all part of some sick conspiracy to widen the gap between the rich and the poor and keep the money in the hands of these unscrupulous and sick bags of poop.

I wish someone would do some serious brain storming and find a way to put a stop to this madness and overturn these regulations. There is always a way, I just know it! I have thought of organizing a class action lawsuit against the CFTC but it seems to me that the courts will just side with the law makers.
  • #7
  • Jan 29, 2012 4:16am Jan 29, 2012 4:16am
Hi
Sorry for my English.
I'm interesting in binary options. Does it under CFTC/NFA regulation too? If I US citizen/resident can I work with non-US binary broker?
Thank you.
  • #8
  • Mar 15, 2012 12:27pm Mar 15, 2012 12:27pm
Heya Guys

I was not able to make my own new post as a newbie, so sorry for bumping this older thread.

As a US Citizen, what are the TAX laws for trading with an over-seas acct such as HF?

If i go that route, i want to be sure i'm compliant and do things safely...and most important legally.

Thanks a ton!
  • #9
  • Mar 17, 2012 10:17pm Mar 17, 2012 10:17pm
There are still plenty of brokers offering 500:1 to US residents. I have accounts in Cyprus and BVI, CFD's available.

If it's over a certain amount you just have to declare it with the irs, there's a new form for that now. I think it's anything above 10K.
Skype: heliosphan187
  • #10
  • Mar 18, 2012 2:38am Mar 18, 2012 2:38am
Quoting liggy002
Well, that's because forex trading actually can produce a long term income while betting on Red or Black at the casino only puts money in the pockets of the big boys. God forbid that someone become a self-made millionaire or even billionaire! It's all part of some sick conspiracy to widen the gap between the rich and the poor and keep the money in the hands of the... unscrupulous
Agree, word for word.

Saves me some typing.
  • #11
  • Mar 19, 2012 9:32am Mar 19, 2012 9:32am
see this http://www.forexfactory.com/showthre...79#post5259079
Skype: heliosphan187
  • #12
  • Mar 19, 2012 11:15am Mar 19, 2012 11:15am
Thanks, this is good stuff - my biggest concern was the taxes

Anybody happen to know what the tax rate is for most short term trades?

Thanks again
  • #13
  • Mar 19, 2012 11:45am Mar 19, 2012 11:45am
As long as the offshore broker does not have a US presence, they are not subject to US regulatory limitations, they are only bound by the regulations in their respective countries, as it rightfully should be.

If your trading capital in any way or any time exceeds $10,000, then you must submit a separate tax form called the FBAR.

That's about all i know about it. Look up more stuff about it, and you shall find more answers or consult your tax consultant.
Learn to see what's there, not what you want to see.
  • #14
  • Mar 19, 2012 4:51pm Mar 19, 2012 4:51pm
You are incorrect sir. I spoke with the CFTC today to confirm what you said. This is what they told me. I asked if it was ok for a US Resident to open a retail account with an overseas broker that accepts US Accounts. They said that unless they are registered with CFTC it is illegal for them to perform any transactions with a US Citizen. They said as a US Citizen if the government came after me, it would be aiding and abiding an illegal transaction and I could go to jail for that. Then I asked them what if I have dual citizenship and I opened an account via my other home. He said where do you stay? I said here in the U.S. He said then you're bound by US laws, not your other homeland.

So I asked well what if I incorporated overseas and traded under that entity? That's when he started getting pissed off and said he would not discuss any further means to circumvent the system and if I had nothing else to ask to have a nice day. I told him I was simply trying to get the facts that to me were not clear in the Frank Dodd statue and there was nothing wrong with me asking. He kept saying have a nice day. I said you too, cept in my mind I was thinking something else...

Hope that answers your question.

Quoting Maxsmart
Are permanent U.S. residents permitted to open individual retail accounts overseas still? I am talking on the phone to the same broker and sometimes when I call, a representative says yes, and sometimes when I call a representative says no. What's the deal? However, they all pretty much agree that U.S. residents cannot open a UK account and usually recommend a New Zealand account or some other country.

I know that the CFTC has not banned U.S. residents from trading overseas, yet since I have called the CFTC directly and they...
  • #15
  • Mar 19, 2012 6:23pm Mar 19, 2012 6:23pm
I would take anything he said with a huge grain of salt. This has become a hugely political issue now. If he could not cite a specific portion of law stating this then how can it be verified? Half the calls these guys get are probably undercover calls setup by their bosses.

You also have to look at the context of what he meant. If a foreign broker was committing fraud and you were part of the back office, then sure they could go after you on those grounds. But if he purposely left that out or was vague about what the broker was being investigated for, again I think this is just more chest pounding and bullying.

Quoting myfxjournals
You are incorrect sir. I spoke with the CFTC today to confirm what you said. This is what they told me. I asked if it was ok for a US Resident to open a retail account with an overseas broker that accepts US Accounts. They said that unless they are registered with CFTC it is illegal for them to perform any transactions with a US Citizen. They said as a US Citizen if the government came after me, it would be aiding and abiding an illegal transaction and I could go to jail for that. Then I asked them what if I have dual citizenship and I opened...
Skype: heliosphan187
  • #16
  • Mar 19, 2012 7:20pm Mar 19, 2012 7:20pm
You're probably correct, but I'd rather be safe than sorry. It just makes me mad and makes me paranoid. I feel like becoming an expat because of all this bs.

You'd think that they'd be happy with the taxes paid, but I guess they'd rather not have that.



Quoting Dirtybrown
I would take anything he said with a huge grain of salt. This has become a hugely political issue now. If he could not cite a specific portion of law stating this then how can it be verified? Half the calls these guys get are probably undercover calls setup by their bosses.

You also have to look at the context of what he meant. If a foreign broker was committing fraud and you were part of the back office, then sure they could go after you on those grounds. But if he purposely left that out or was vague about what the broker was being investigated...
  • #17
  • Mar 19, 2012 10:39pm Mar 19, 2012 10:39pm
The way I see it, the real goal behind this part of the cftc legislation is to catch tax evaders. Look at the how the feds went after the swiss tax havens in 2008. So long as you declare your foreign assets and earnings, there's nothing wrong with having a shell offshore company or direct personal assets in a foreign brokerage/bank.




Quoting myfxjournals
You're probably correct, but I'd rather be safe than sorry. It just makes me mad and makes me paranoid. I feel like becoming an expat because of all this bs.

You'd think that they'd be happy with the taxes paid, but I guess they'd rather not have that.
Skype: heliosphan187
  • #18
  • Mar 19, 2012 11:19pm Mar 19, 2012 11:19pm
Quoting myfxjournals
You are incorrect sir. I spoke with the CFTC today to confirm what you said.
Someone get this man a fucking cigar!

Good on you myfx for inquiring about this. If half of us had your type of balls and intent, we wouldn't be having all of these "regulatory issues" right now.
  • #19
  • Mar 20, 2012 2:28pm Mar 20, 2012 2:28pm
http://www.pakalertpress.com/2012/03...ic-spying-lab/
  • #20
  • Apr 20, 2012 8:12pm Apr 20, 2012 8:12pm
So does anyone have a definitive answer whether a non-US based LLC can open an account and trade with a non-US broker? The list of non-US brokers that accept US clients is rather small and unappealing. I've tried FinFX and like them to a certain degree. But I would rather use a broker that is more reputable and safe.

If so, does anyone have recommendations on a good country in which I can set up an LLC? I read a recommendation on Panama but would welcome more suggestions.
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