A cloud of uncertainty has descended upon US-based prop firm traders. An increasing number of firms are opting to cease offering new accounts to US traders, raising questions about the reasons behind this shift. In this article, we delve into the current situation, exploring the firms that have taken such measures and the factors contributing to this growing trend.
The Current Situation: A Restriction on New Accounts for US-Based Traders
The following prop firms are among those currently not accepting new accounts from US-based traders:
We’ve also observed several prop firms opting to welcome US traders. Albeit on an alternative trading platform not licensed by Metaquotes.
Who are Metaquotes?
Metaquotes is best known for developing the widely utilized Metatrader platform (MT4/MT5), a cornerstone for traders globally. Metaquotes software allows businesses to manage MT4/MT5 trading accounts and connect them to brokers/liquidity providers. Online prop firms can offer trading on the Metatrader platform either by obtaining a Metaquotes license themselves or by using a broker or third-party tech provider that has a Metaquotes license.
Unraveling the Puzzle: Why Prop Firms are Exiting the US Market
The US prop firm landscape has witnessed a series of exits, leaving traders questioning the motives behind these decisions. While the reasons are not always transparent, a closer look reveals a complex interplay of regulatory challenges, the legal status of CFD trading, and Metaquotes’ licensing concerns.
For reasons we will explore below, Metaquotes has removed or threatened to remove licenses from brokers that offer prop firm accounts to US traders. This has led to some brokers exiting the prop firm industry.
Navigating the CFD Conundrum: The Gamified Trading Platform Dilemma
A significant hurdle faced by prop firms in the US is the legal status of Contracts for Difference (CFDs). Although CFD trading is a common practice for many prop firms globally, it is illegal in the US. In response, some prop firms have adopted a creative workaround by introducing gamified trading platforms. On these platforms, traders are purportedly engaging in simulated capital trading, allowing prop firms to operate within legal boundaries while providing a trading-like experience for users. The blurred lines between simulated and actual trading raise questions about the sustainability and legality of such practices.
Third-Party Tech Providers Caught in the Crossfire
Complicating matters further, many prop firms in the US rely on third-party tech providers for their trading platforms. These tech providers are often licensed with Metaquotes. However, Metaquotes has recently issued warnings to a number of these tech providers and brokers, asserting that they risk losing their licenses if they continue to serve prop firms operating in the US.
The Path Forward: Adapting to Regulatory Realities
As the storm continues to brew in the US prop firm space, traders and firms alike must navigate these challenges with resilience and adaptability. Understanding the reasons behind the restrictions and platform changes can empower traders to make informed decisions about their choice of prop firms and trading platforms.
In this evolving landscape, prop firms, third-party tech providers, and traders find themselves at a crossroads. Navigating a regulatory maze that impacts the very foundation of their operations. The reasons behind prop firms withdrawing from the US market are multifaceted, involving legal intricacies, regulatory constraints, and the delicate balance between innovation and compliance.
Caution is paramount for traders seeking stability and reliability. While many firms continue to offer services to US traders, prudence suggests considering well-established entities with their own Metaquotes licenses. Notably, The5ers and Audacity Capital stand out as well-established firms, holding their own licenses and demonstrating a commitment to the highest standards. In a sea of uncertainties, aligning with such well-established firms provides traders with a solid foundation. Ensuring a smoother journey in the dynamic world of online prop trading.
For more guidance on which prop firms to steer away from, check out our article ‘5 Ways To Spot A Scam Prop Firm‘.
