Part of the reason that CFDs are illegal in the U.S. is that they are an over-the-counter (OTC) product, which means that they don't pass through regulated exchanges. Using leverage also allows for the possibility of larger losses and is a concern for regulators. The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) prohibit residents and citizens of the U.S. from opening CFD accounts on domestic or foreign platforms.