Regulators are circling prop firms in 2026 — what it means for traders

Across the US, EU, UK and Australia, regulators are increasingly treating funded-account firms as within their perimeter. The CFTC's flagship case against My Forex Funds was dismissed — but that sanctioned the regulator's conduct, not the funded-account model itself.

What’s happening

Retail prop firms that sell funded-account challenges are being pulled toward the regulatory perimeter in the US, EU, UK and Australia. The EU, UK and Australia enforce 30:1 leverage caps (via ESMA, the FCA and ASIC); the US relies more on registration. All four are now, in different ways, treating funded-account firms as something they can regulate.

On the headline case: in May 2025 a US federal court dismissed the CFTC’s fraud case against Traders Global Group (My Forex Funds) with prejudice, and even sanctioned the agency. But as the source notes, the court sanctioned the regulator’s conduct, not the firm’s business model — so whether evaluation fees count as a regulated activity is still an open question. Expect more registration requirements and possible reclassification of prop firms through 2027.

Why it matters to you

This is exactly the backdrop that makes due diligence non-negotiable: rules can change, and firms can fail (dozens did in 2024–25). Favour firms with clear, static drawdown rules and a real payout track record, read the terms before you pay, and never risk money you can’t lose. See our guide to vetting a prop firm and the methodology behind our scores.