Forex trading is legal in Iceland and operates under a regulated framework overseen by the Central Bank of Iceland. Foreign exchange transactions in Iceland are unrestricted unless otherwise provided for by law, with cross-border payments and capital transfers permitted freely (1). Foreign exchange matters in Iceland are provided for in the Foreign Exchange Act No. 70/2021, which allows measures to prevent severe disruption of monetary, exchange rate, and financial stability (1).
According to Article 3 of the Foreign Exchange Act, it is prohibited to act as an intermediary in foreign exchange transactions without statutory authorization. Authorized entities include the Central Bank of Iceland, commercial banks, savings banks, payment services providers, and currency exchange providers (1). The Central Bank may grant authorization to operate a foreign exchange market that entails intermediation, provided the operation increases transparency and more efficient price formation in forex markets (1).
"Foreign exchange transactions in Iceland are unrestricted unless otherwise provided for by law. The same applies to cross-border payments and capital transfers."
Financial undertakings operating in Iceland must report all foreign exchange transactions, cross-border capital transfers, and payments to the Central Bank under Article 10 of the Foreign Exchange Act. The Rules on Derivatives Transactions limit the total amount of derivatives transactions involving the Icelandic króna against foreign currency that domestic commercial banks may hold, specifically to prevent large-scale foreign issuance and limit excessive speculation (1). Iceland maintains special reserve requirements for new foreign currency inflows and foreign exchange balance rules to contain foreign exchange risk (2).
Source:
https://cb.is/financial-stability/foreign-exchange/
https://www.state.gov/reports/2025-investment-climate-statements/iceland
Last updated: 15-10-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.
