If you’re researching binary options in Australia, there’s one thing you need to know before anything else: they are banned for retail clients. Since 2021, it has been illegal for financial firms to issue or distribute binary options to everyday Australians, and that ban has been extended all the way to 2031. This guide explains what binary options are, why the regulator banned them, the scam risks that remain, and the safer, legal ways to trade instead.
This article is general information only, not financial or tax advice. It is intended to help you avoid harm, not to help you access banned products.
The Short Answer: Binary Options Are Banned in Australia
The Australian Securities and Investments Commission (ASIC) issued a product intervention order banning the issue and distribution of binary options to retail clients, effective 3 May 2021. After reviewing the results, ASIC extended the ban until 1 October 2031.
The ban has been described by ASIC as fully effective — since it took effect, retail clients have essentially stopped losing money on binary options in Australia, because licensed firms can no longer sell them. Breaching the order can attract civil and criminal penalties. In short: no legitimate, ASIC-regulated provider offers binary options to retail clients in Australia, and any firm claiming to do so is not operating lawfully.
What Are Binary Options?
A binary option is a type of over-the-counter (OTC) derivative with an “all-or-nothing” payout. You’re effectively betting on whether a specific event will or won’t happen within a short, fixed timeframe — often just seconds or minutes. The event might be:
- Whether the price of an asset (a share, currency or commodity) rises or falls
- Whether a market index moves above or below a certain level
- The outcome of an economic event, such as a central bank interest-rate decision
If your prediction is correct, you receive a fixed payout. If it’s wrong, you lose your entire stake. There’s no partial outcome and no ownership of anything — it’s a pure win-or-lose wager on a very short-term event, which makes binary options behave more like gambling than investing.
Why Did ASIC Ban Binary Options?
ASIC’s reviews found that binary options caused serious, widespread harm to retail investors. The key reasons behind the ban:
- Most people lost money. ASIC’s reviews found that roughly 80% of retail clients lost money trading binary options.
- The losses were large. ASIC estimated retail clients’ net losses from binary options at around $490 million in 2018 alone.
- The product design is stacked against clients. The all-or-nothing structure, very short timeframes and negative expected returns make binary options fundamentally unsuitable for genuine investment or risk management.
- They aligned with global regulators. Banning binary options brought Australia into line with prohibitions already in force in comparable markets such as the EU and UK.
ASIC concluded that binary options are harmful, high-risk products whose characteristics make them incompatible with retail investing, which is why it chose an outright ban rather than mere restrictions.
The Scam Risk: Why “Binary Options Brokers” Targeting Australians Are Dangerous
Even though binary options are banned domestically, you’ll still see websites and social media ads promoting them to Australians. Treat these as a major red flag. Because no licensed Australian firm can legally offer binary options to retail clients, anyone marketing them is typically an unlicensed offshore operator — and binary options have long been one of the most common vehicles for investment scams worldwide.
Common warning signs of a binary options scam include:
- Promises of guaranteed profits, “risk-free” trades or unusually high returns
- Pressure to deposit quickly, or to add more money to “unlock” withdrawals
- “Account managers” who coach you to keep depositing
- Difficulty or refusal when you try to withdraw funds
- No verifiable Australian Financial Services Licence (AFSL)
- Unsolicited contact via social media, messaging apps or dating platforms
If you trade with an unlicensed offshore operator, you give up all the protections of Australia’s regulated system, and recovering your money is often impossible. If in doubt, check whether a firm is licensed on ASIC’s registers, and be sceptical of anyone who contacts you unprompted.
What to Do If You’ve Been Targeted or Scammed
If you’ve encountered a firm offering binary options to Australians, or think you’ve been scammed:
- Stop sending money immediately — including any “fees” or “taxes” requested to release a withdrawal, which are a common secondary scam.
- Report it to ASIC and to the National Anti-Scam Centre (Scamwatch).
- Contact your bank or card provider as soon as possible to see whether a transaction can be stopped or reversed.
- Keep all records — messages, screenshots, transaction details and account information.
- Be wary of “recovery” services that promise to get your money back for an upfront fee; these frequently target scam victims a second time.
Legal, Regulated Alternatives in Australia
If your goal is to trade or invest, there are legitimate, ASIC-regulated options that don’t involve banned products:
- Shares and ETFs — buy Australian or international shares and exchange-traded funds through a licensed online broker. ETFs offer instant diversification and are popular with long-term investors.
- Managed funds and index funds — professionally managed, diversified investments suited to hands-off investors.
- ASIC-regulated CFDs — still high-risk and leveraged, but legal for retail clients under strict ASIC rules (leverage caps, negative balance protection and margin close-outs). Most retail CFD traders still lose money, so approach with caution.
- Forex trading through an ASIC-licensed broker, again within regulated leverage limits.
Whichever you choose, use a broker that holds a valid AFSL, understand the risks and costs, and only invest money you can afford to lose. If you want tailored guidance, speak with a licensed financial adviser.
Frequently Asked Questions
Are binary options legal in Australia?
No. ASIC banned the issue and distribution of binary options to retail clients from 3 May 2021, and the ban has been extended to 1 October 2031. No licensed Australian firm can lawfully offer them to retail clients.
Why are binary options banned in Australia?
Because they caused significant harm. ASIC’s reviews found around 80% of retail clients lost money, with net losses estimated at roughly $490 million in 2018. Their all-or-nothing design makes them unsuitable for genuine investing.
Can I still trade binary options through an offshore broker?
Any firm offering binary options to Australian retail clients is operating outside Australia’s regulated system, and many are outright scams. You’d have no ASIC protection and little chance of recovering losses. It’s strongly discouraged.
How long does the binary options ban last?
ASIC has extended the ban until 1 October 2031, unless it is revoked or further extended before then.
What can I trade instead of binary options in Australia?
Legal, regulated alternatives include shares and ETFs, managed and index funds, and — for higher-risk appetites — ASIC-regulated CFDs and forex through a licensed broker. Always confirm the broker holds a valid AFSL.
Where do I report a binary options scam in Australia?
Report it to ASIC and to the National Anti-Scam Centre (Scamwatch), contact your bank about any transactions, and keep all records. Avoid “recovery” services that charge upfront fees.
The Bottom Line
Binary options are banned for retail clients in Australia until at least 2031, and for good reason: they harmed a large majority of the people who traded them. Any offer to trade binary options in Australia today is a warning sign, not an opportunity — most such offers come from unlicensed operators and scams. If you want to grow your money, stick to legal, ASIC-regulated options like shares, ETFs and managed funds, use a licensed broker, and never invest money you can’t afford to lose.