US residents face strict federal regulation of retail forex: only NFA-registered brokers may legally accept them, with leverage capped at 50:1 on major pairs.
The United States has the most restrictive regulatory framework for retail forex of any major trading nation. The Commodity Futures Trading Commission (CFTC) is the primary federal regulator and requires all firms offering retail forex to US persons to be registered as Retail Foreign Exchange Dealers (RFED) and to be members of the National Futures Association (NFA), the self-regulatory organisation overseeing futures and forex intermediaries.
Leverage is capped at 50:1 for major currency pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, NZD/USD, USD/CAD) and 20:1 for all other pairs. This is far more restrictive than the 500:1 or unlimited leverage offered by offshore brokers, which are not permitted to accept US clients but occasionally do - an arrangement that provides no regulatory recourse for the trader. FIFO (First In, First Out) rules require that when multiple positions are open in the same pair, the oldest position must be closed first, preventing standard hedging strategies.
Only a handful of brokers maintain active NFA registration: historically OANDA and FOREX.com have been the most prominent US-accessible retail forex brokers. Interactive Brokers' forex offering is technically different (forex as spot FX traded through its prime-brokerage infrastructure) but widely used by sophisticated US-based traders. The limited broker choice, lower leverage, and FIFO restrictions mean that many US traders choose futures-based forex products (CME e-micro FX futures) as an alternative, which are regulated by the CFTC under different rules.
Non-US brokers that accept US clients without NFA registration are violating CFTC rules. Traders who use such brokers have no recourse to US regulatory authorities if funds are misappropriated, as these brokers typically operate from jurisdictions with minimal enforcement capabilities.