Is Leverage Trading Legal in the US?

Leverage trading is legal in the United States, but only under strict rules set by federal regulators. Oversight is provided by the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA), and, for securities markets, the U.S. Securities and Exchange Commission (SEC). These agencies enforce leverage limits, licensing requirements, and compliance standards to ensure that brokers and trading platforms operate fairly and securely.

Here at Leverage.Trading, we specialize in analyzing how leverage works across forex, crypto, and derivatives, including the specific U.S. rules that dictate who can offer margin accounts, how much borrowed capital is permitted, and which exchanges are legally approved. This guide outlines how US regulators define leverage access, which entities are licensed to offer it, and how their obligations protect the market rather than the trader.

By the end of this guide, you’ll understand how US regulations restrict leverage ratios, how crypto futures are classified, and why margin trading is considered a high-risk activity even within regulated markets.

Leverage trading laws and regulations in the US

Below is a list of the most important things you need to know:

• Only certain registered entities can be involved in leverage trading with retail clients (traders). These entities include U.S.-based financial institutions, registered Futures Commission Merchants (FCMs), and registered Retail Foreign Exchange Dealers (RFEDs).
• The registered entities have to follow specific rules and get approval from the National Futures Association (NFA).
• Companies or individuals that introduce customers to these registered entities must also register with the NFA.
• Companies operating investment funds that do margin-based trading legally in the us must also register.
• Customers must be given clear information about the risks involved in leverage trading, and their personal and financial information should be verified regularly.
• The registered entities need to have proper procedures for their communications with the public, to prevent fraud and misleading information.
• The registered entities have to supervise their business carefully, including making visits to their branch offices and making sure their employees are well-trained.
• If they use electronic trading systems, they must have clear procedures to keep everything secure, manage risk, and keep accurate records.
• They also need to follow certain trading standards, like making sure customer orders are executed before their own orders and following rules about pricing and other trading practices.

For typical brokers that are Forex Dealer Members (FDMs), these are the additional requirements:

• They need to have enough money to cover their obligations to customers and others.
• They have to report their financial status regularly to the NFA.
• They need to follow specific rules when trading with their own money.
• They must have a risk management program to monitor and handle different risks in their trading activities.
• There are rules for handling customer accounts and ensuring privacy and protection of customer information.
• They need to have a plan in place to keep their business running smoothly even during disasters.
• They have to review and confirm that they are following all NFA requirements.

These rules have been put in place to protect retail traders and the market itself. Anyone involved in legal trading in the USA must follow these rules to keep things fair and secure for everyone.

Why the U.S. Locks Down Leverage

Leverage isn’t capped to annoy traders. It’s capped because one bad move can nuke an account faster than most people can blink. Regulators know that retail traders love big positions and underestimate how violent markets can get, so they put a ceiling on borrowed size before people blow themselves up and take the market with them.

The limits match the speed of the market. Slow, liquid pairs like major FX get more room. Wild, thin markets don’t. It’s not about opportunity, it’s about keeping a liquidation avalanche from dragging everyone down.

A legal max doesn’t mean it’s a smart max. It just means that’s as far as regulators are willing to let you risk blowing up.

What about crypto?

You can trade crypto with leverage in the USA as long as you trade with a platform that is approved by the National Futures Association (NFA).

Crypto CFD leverage trading is outright banned in the US, hence, no CFD brokers are operating in the country at the moment.

A small number of approved platforms offer high-ratio crypto futures, sometimes advertised at 100x or more. Ratios of this size carry a near-instant liquidation risk, which means even small price fluctuations can result in a complete loss of capital. These limits are allowed by law, but they are not recommended for most market participants.

Some us crypto leverage trading platforms have been approved by the NFA and some of them have even been registered as a Money Service Business (MSB) with FinCEN.

Perpetual futures contracts allow traders to open large positions with very small collateral requirements. This structure increases the probability of liquidation and is one reason why derivatives are considered unsuitable for inexperienced traders.

High leverage in crypto derivatives is legal only through registered entities, but registration does not protect traders from rapid account loss. Regulation ensures platform behavior, not trade outcomes.

How much borrowed capital is allowed in the US?

Each state might have its own regulations towards cryptocurrency trading and they may or may not include restrictions.

According to the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) is 1:50 the allowed leverage is:

• For major currency pairs, the allowed ratio is 1:50
• For minor currency pairs, the allowed ratio is 1:20
• For other commodities, the allowed ratio is 1:10

Keep in mind that these limits have been put in place specifically for the foreign exchange markets and other rules may apply for other markets.

For example, leverage trading in crypto has a different set of limits when it comes to leveraged contracts.

FAQ