Table of Contents
◉ Introduction ◉ What Is FTMO? ◉ The U.S. Legal Roadblock ◉ Step-by-Step Guidance ◉ Pros, Cons & Risks ◉ Case Study ◉ Common Mistakes ◉ FAQs ◉ Conclusion
Updated July 2025
Proprietary-trading evaluation firm FTMO no longer accepts U.S. residents. The company’s ban—announced in January 2024 and still in force—stems from a tangle of Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) rules that treat many funded-account programs as retail foreign exchange or off-exchange derivatives businesses. To operate legally in the United States, such firms must register as Retail Foreign Exchange Dealers (RFEDs) or Futures Commission Merchants (FCMs) and join the NFA—an obligation FTMO has opted to avoid. This article unpacks the legal background, walks you through safer alternatives, and flags common pitfalls so you can keep trading ambitions compliant.
What Exactly Is FTMO and Why Does It Matter?
Definitions & Context
Proprietary trading evaluation firm
A company that lets would-be traders pay for a simulated “challenge.” If they meet strict profit and drawdown targets, the firm funds them with a share-profit split.
FTMO
Founded in Prague in 2015, FTMO is one of the sector’s largest brands, paying millions in monthly payouts to non-U.S. traders. Yet its FAQ now lists the United States alongside Iran, Syria, Myanmar, and North Korea as fully restricted jurisdictions (ftmo.com).
Regulatory trigger
When a prop firm lets retail clients trade leveraged forex, CFDs, or other derivatives—even in a demo environment whose results determine real compensation—U.S. law can view the firm as an intermediary that must register with the CFTC and meet NFA standards such as Compliance Rule 2-36.
The U.S. Legal Roadblock in Five Steps
- Commodity Exchange Act (CEA) Scope
The CEA governs futures, swaps, and most leveraged forex transactions involving U.S. persons. - RFED / FCM Registration
Firms that “solicit or accept” retail forex orders must register as RFEDs or as FCMs and join the NFA. - No Carve-Out for Simulated Accounts
In CFTC v. My Forex Funds … the CFTC alleged that paying traders from fees while internally warehousing risk counted as acting “as the counter-party” to retail forex trades. - Heightened 2024-2025 Enforcement
On 29 May 2025 the CFTC added 43 unregistered entities to its RED List, underscoring a crackdown on overseas firms serving U.S. clients without registration. - FTMO’s Business Decision
On 10 January 2024 FTMO posted that it was suspending all new and existing U.S. clients due to “specific conditions in the market segment.”
Bottom line: Without U.S. registration, FTMO risked the same treatment the CFTC directed at My Forex Funds; suspending U.S. customers removed that exposure.
Step-by-Step Guidance If You’re a U.S. Trader
• Verify a firm’s CFTC/NFA registration using NFA BASIC before paying any challenge fee.
• Favor exchange-traded products (CME futures prop desks) that already clear through registered FCMs.
• Understand “remote prop” workarounds:
• Onshore futures prop shops—You trade employer capital inside a regulated FCM; no personal fee or deposit.
• Broker-neutral tech licenses—You license software, not trading capital, sidestepping retail forex rules.
• Beware VPN Misuse—Circumventing geoblocks can expose you to civil and criminal penalties.
• Document tax treatment—Profit splits from offshore prop firms may trigger Form 8938 or Form 8858.
Pros, Cons & Risk Management of Pursuing Non-U.S. Prop Firms
| Perspective | Advantages | Disadvantages | Mitigation Tips |
|---|---|---|---|
| Capital Access | Trade up to $400 k funded capital | U.S. ban blocks withdrawals; legal uncertainty | Use U.S.-regulated futures prop firms |
| Leverage | 100:1 on forex in demo | Retail forex leverage in U.S. capped at 50:1 | Stick to exchange-listed micros |
| Cost | One-time challenge fee | No SIPC-style safety net | Treat fees as sunk educational cost |
| Speed to Funding | < 30 days if targets met | Aggressive drawdown limits cause resets | Practice on free demo first |
| Regulatory Protections | None for U.S. residents | CFTC can freeze assets | Verify firm jurisdiction & audits |
Case Study – Two Traders, Two Outcomes
Alicia (California)
• Paid $300 for a 100 k FTMO Challenge via VPN in Feb 2024.
• Passed Phase 1 but account was closed when FTMO’s KYC flagged her U.S. driver’s license.
• Fee forfeited; no refund per T&Cs.
• Lesson: KYC checks occur after you risk challenge fees.
Ben (Illinois)
• Joined a Chicago-based futures prop shop.
• No upfront fee; signed employee agreement.
• Trades CME Micro E-mini S&P with $50 tick risk caps.
• Registered FCM provides segregated accounts; Ben falls under NFA Rule 2-9 supervision.
• Earns 40 % of net trading gains; pays W-2 taxes.
• Lesson: On-exchange prop trading aligns with U.S. rules and offers enforceable labor protections.
Common Mistakes & Expert Tips
| Mistake | Why It Hurts | Fix |
|---|---|---|
| Assuming FTMO ban is “temporary” | 18 months later, still in force; may extend indefinitely. | Plan around regulation, not hope. |
| Equating demo trades with unregulated freedom | Payout is real cash, so regulators see a financial service. | Read CEA §2(c)(2)(C) on “retail forex.” |
| Using friends’ overseas IDs | Identity misrepresentation violates KYC/AML law. | Trade with your own jurisdiction in mind. |
| Ignoring NFA Rule 2-36 marketing limits | Promos promising “easy funding” can trigger enforcement. | Demand balanced risk disclosures. |
| Overlooking tax filings | Offshore income can trigger penalties for non-reporting. | File FBAR if aggregate foreign accounts >$10 k. |
FAQs
Action-Oriented Conclusion
FTMO isn’t literally “banned” by the U.S. government—it simply opted out rather than shoulder CFTC/NFA registration costs and liabilities. For U.S. traders, that means paying for an FTMO Challenge is a legal dead end. Redirect your energy to onshore prop shops, regulated futures accounts, or robust self-funded strategies. Start by checking registration status, leverage limits, and payout enforceability before sending a single dollar overseas.
