What is a prop firm account? Three European regulators warn

A prop firm (funded) account is a model in which you pay a challenge fee to trade with a company’s capital, and share the profits if you pass the challenge. The model is real, but regulators in Italy, Belgium and Spain have issued public warnings, and the challenge fee is the only certain cost.

Consob calls it a financial “video game” outright

On 08/07/2024, Italy’s securities regulator (Consob) issued a press release whose title leaves no doubt about its stance: “Beware of online trading ‘video games’”.

Consob describes the model it is warning about as offers on social media for “exercises simulating online trading activity, in the manner of a financial video game, aimed at passing skill tests and earning profits”.

The regulator said it had received many reports from users, centred on two points: challenges allegedly built to be so hard that they push players into retaking them, and profits not being shared as promised.

Similar warnings have come from the Belgian regulator (FSMA) and the Spanish regulator (CNMV).

ESMA, at European level, does not yet treat retail prop trading as an enforcement priority, according to a statement by the CySEC Chair in 2026.

In other words: some national regulators have issued warnings, and there is no Europe-wide ban. Anyone telling you “prop firms are already banned in Europe” is overstating it. Anyone saying “no regulator has said anything” is also wrong.

Who the challenge fee feeds: a table that sorts the whole industry

One question sorts this entire industry: does the fund’s revenue come mainly from challenge fees or from trading profits? The answer decides whether the fund wants you to pass or wants you to fail:

If most of the revenue comes from challenge fees, then the people who fail are what keeps the model alive, and the incentive behind the challenge design runs against your interests.

That is exactly what Consob raised when it relayed reports that the challenges were “built to push players into retaking them”.

Three questions to ask in writing before you send the fee

“After I pass the challenge, is the account real money or still simulated?” Many models still run in a simulated environment, and the “profit” is only a number on the screen until the fund decides to pay. Ask in writing and keep the answer.

“Which legal entity signs the contract with me, and which authority supervises it?” Many prop firms describe themselves as training companies rather than financial firms, which means no financial regulator supervises them.

The check is the same as for a broker: look up the legal entity’s name in the register, following our 6-step process.

“What conditions make me lose the account?” Read the maximum drawdown, the time limit for completion and the behaviours treated as violations carefully. Disputes usually arise here.

Vietnamese traders stand in the emptiest part of this map

Three reasons add up to why Vietnamese traders need to be one notch more careful than Europeans reading the same warnings:

First, no Vietnamese authority licenses or supervises this model. The State Bank of Vietnam has not licensed any forex broker in Vietnam, and prop firms sit outside even that framework.

Second, the challenge fee is paid up front and is almost impossible to recover. Unlike a deposit with a broker, where at least you still have a balance to request a withdrawal from, the challenge fee is gone the moment you fail.

Third, this industry’s marketing targets exactly the most vulnerable group: beginners with little capital who believe their problem is a lack of capital rather than a lack of skill.

The order is reversed: pay the fee today, worry about withdrawals “later”

These two decisions are months apart. You pay the challenge fee today, while the question of whether you can withdraw only comes up after you pass the challenge and spend time trading.

One comment in a trader group sums up that order precisely (translated from Vietnamese): “ok guys / I still trade [redacted] because it’s cheap / will think about it when withdrawals work”.

Put that comment next to the revenue table above and you see two sides looking at the same transaction. For the fund, the challenge fee is certain revenue, while the profit share is a cost that only arises if the trader wins.

For the person paying, the challenge fee is also a certain cost, while being able to withdraw is a possibility to deal with later.

A cheap fee is not a bad sign on its own; it is just a price, and some funds do pay real money. The problem is the order: the sensible move is to check withdrawals before paying the fee, not after.

What you can do right away: before paying the fee, look for proof of payouts that you can verify, not proof that you can only look at.

A screenshot of a bank transfer posted online cannot be verified: you cannot match it against any record, and you do not know whose it is.

Conclude with facts, not feelings

Not every prop firm is a scam. Funding skilled traders is a real business model that exists legally in many places. The facts on the table are these:

Consob, FSMA and CNMV have issued public warnings, centred on abnormally hard challenges and profits not being shared as promised; ESMA has not imposed a ban; and the challenge fee is the only certain cost in the whole transaction.

So do not ask “is this fund reputable?”, because no one can answer that for you. Ask a question you can verify: does their revenue come from challenge fees or from trading profits? The answer will show you which column of the table above you are standing in.

Spotted something inaccurate? Tell us and we will check it and publish a correction.