Investing In Crypto As A Minor: What You Need To Know

Investing in crypto is a young buyer's market, with Generation Z (those aged 18-24) completing 17.40% of all cryptocurrency transactions. However, many popular crypto exchanges have age restrictions and don't allow users under 18 to sign up and trade. So, how can you invest in crypto if you're under 18?

Firstly, it's important to note that there are no laws forbidding anyone from investing in cryptocurrencies, and there is no minimum age requirement to own them. However, many U.S.-based crypto exchanges require users to be at least 18 years old. This means that teenagers can invest in cryptocurrency legally, but they may need help from a parent or guardian to set up an account and make investments.

One way to invest in crypto under 18 is through a custodial account or joint account. A custodial account is an adult-managed investment account that allows a parent or guardian to open an account and invest on behalf of a child. The assets in the account legally belong to the child and can be transferred to them once they become an adult. Joint brokerage accounts are similar, with two people co-owning the account – for example, a parent and their child.

Another option is to use a decentralised exchange (DEX), which doesn't require users to register and has no age limits. However, these exchanges are unregulated and don't allow users to exchange fiat currency for crypto, so you would need to already have crypto in a digital wallet to use them.

There are also some crypto platforms that don't require ID verification, allowing individuals under 18 to purchase crypto anonymously. Examples include Bybit, MEXC, Kine, KuCoin, Margex, and Weex.

If you're under 18 and want to invest in crypto, it's important to do your research and only invest money you can afford to lose. Crypto is a high-risk and volatile asset class, and you could lose your entire investment. It's also a good idea to discuss any investment decisions with a parent or guardian.

Crypto custodial accounts

When it comes to choosing a crypto custodial account provider, there are a few options available. EarlyBird is one of the first custodial accounts to offer crypto investing. It allows adults to deposit funds into a child's account and choose to invest in Bitcoin or Ethereum, as well as exchange-traded funds (ETFs) and other traditional investment options. Another option is Step, which offers a secured credit card and finance app that lets teens buy and sell Bitcoin for a flat fee. However, Step also requires an adult sponsor to open an account for a minor.

It is important to note that while crypto custodial accounts provide a way for teenagers to invest in cryptocurrencies, there are risks associated with this type of investment. Cryptocurrencies are highly volatile and unregulated, and there is a potential for significant losses. Therefore, teens should only invest what they or their parents are willing to lose.

In addition to crypto custodial accounts, there are other ways for teenagers to invest in cryptocurrencies. These include decentralised exchanges, which are unregulated and have no age limits, and peer-to-peer trading platforms, which have less strict requirements. However, these options come with their own set of risks and may not be suitable for everyone.

Crypto wallet options

There are two main types of crypto wallets: hot wallets and cold wallets. Hot wallets are online wallets connected to the internet, making them vulnerable to hacks but more convenient to use. The most popular hot wallet is associated with the Coinbase crypto exchange, which allows you to buy, sell, and store cryptocurrencies on their platform.

Cold wallets, on the other hand, are offline wallets that are not connected to the internet, making them less convenient but more secure. The Ledger Nano S is a popular cold wallet option, a hardware wallet that stores your private keys offline. A cold wallet can also be as simple as private and public keys written down on paper.

When choosing a crypto wallet, it is important to consider the level of security and convenience that best suits your needs. It is worth noting that the blockchain itself is incredibly hard to hack, making it one of the safest investment options.

If you are under 18, you will need the support of a guardian to make cryptocurrency investments. There are no age limits for self-controlled crypto wallets, but wallets that are part of a regulated crypto exchange are typically limited to users who are 18 or older. To open a crypto wallet as a minor, you will need to choose one of the decentralized cryptocurrency wallet options, and you may require the assistance of your parents to place or withdraw cryptocurrency.

Crypto exchange choices

If you are under 18, you cannot buy financial assets on your own. However, there are several ways to invest in crypto. Firstly, adults (usually parents) can set up custodial accounts for minors. They can manage the purchasing of the assets on their behalf, but the minor will not have control over the assets until they are over 18.

There are also crypto exchange platforms that do not require ID verification, allowing individuals under 18 to purchase crypto anonymously. These include Bybit, MEXC, Kine, KuCoin, Margex, and Weex. These platforms offer various features, such as low trading fees, a wide range of coins, and user-friendly interfaces.

Another option is to use a crypto debit card. Some platforms allow the purchase of crypto without KYC, using funds from a bank account or a credit card. However, obtaining a credit/debit card may be challenging, and some banks restrict crypto purchases.

Additionally, minors can trade goods or services for crypto. They can have a physical or online business that accepts crypto payments and store the earnings in a wallet until they turn 18.

It is important to note that investing in crypto is risky, and minors should only invest what they can afford to lose. Parental consent and guidance are recommended.

Crypto for kids: pros and cons

Crypto for Kids: Weighing the Pros and Cons

In today's world, cryptocurrency is becoming increasingly popular, and many young people are eager to explore this new technology and its potential. While there are no laws prohibiting minors from investing in cryptocurrencies, there are some important considerations and potential challenges to be aware of. This article will explore the pros and cons of crypto for kids, providing insight for parents and guardians considering this option.

Pros of Crypto for Kids:

• Financial literacy and education: Introducing children to cryptocurrency can be an excellent way to spark their interest in finance and investing. It provides an opportunity to educate them about the basics of money management, investing, and the broader financial world.
• Understanding new technology: Cryptocurrency is underpinned by blockchain technology, which is revolutionary and has the potential to significantly impact the future of finance and digital transactions. Giving children an early understanding of blockchain can be valuable.
• Preparing for the future: Cryptocurrency may play a significant role in the future of finance, and early exposure can help children develop a forward-thinking mindset. By familiarising themselves with crypto, they can be better prepared for its potential widespread adoption.
• Practical knowledge: Learning about cryptocurrency can teach children how to make sensible investments, manage risk, and avoid financial fraud. It provides practical knowledge that can be applied to other areas of their financial lives.
• Stable financial future: If cryptocurrency continues to grow in popularity and value, early investment could contribute to a stable financial future for children. It may be a wise investment strategy, especially if it is carefully managed.

Cons of Crypto for Kids:

• Risk and volatility: Cryptocurrency is a highly volatile and risky investment. Its value can fluctuate wildly, and there is a possibility of losing most or all of the invested money. This level of risk may not be suitable for minors.
• Regulatory uncertainty: The crypto industry currently operates with relative freedom from regulation, but this could change in the future. Governments may impose restrictions or even ban certain cryptocurrencies, significantly impacting their value.
• Scams and hacks: While cryptocurrency is designed to be secure, scams and hacks have cost investors billions of dollars. This is a significant risk, especially for minors who may not have the necessary knowledge to protect themselves fully.
• Complexity: Cryptocurrency and blockchain technology can be complex concepts, and it may be challenging for children to fully grasp them. Proper education and supervision are crucial to ensure they understand the risks involved.
• Age restrictions: While there are no laws prohibiting minors from investing in cryptocurrencies, many popular crypto exchanges and platforms require users to be at least 18 years old. This means that parents or guardians often need to facilitate the process, which can be cumbersome.

In conclusion, while there are some potential benefits to introducing children to cryptocurrency, it is essential to carefully consider the risks and challenges involved. Cryptocurrency is a highly volatile and unregulated investment vehicle, and it may not be suitable for minors. However, with proper education, supervision, and risk management, it can be a way to spark an interest in finance and new technologies. Ultimately, the decision to involve children in crypto investing should be made cautiously and with a full understanding of the potential pros and cons.

How to buy crypto under 18

There are several ways for minors to buy crypto, but it is important to note that this can be a complex and risky process. Minors cannot buy, sell, or trade any type of securities on their own. However, with the help of a parent or guardian, it is possible for minors to invest in cryptocurrency. Here are some of the most common methods:

• Use a parent or guardian: This is often the easiest way for minors to buy crypto. A parent or guardian can create an account with a crypto exchange, such as Coinbase, Binance, or Bybit, and purchase crypto with their bank account. They can then transfer the crypto to the minor's external wallet.
• Ask a friend or relative over the age of 18: Similar to the above method, minors can ask someone over the age of 18 to buy and transfer crypto on their behalf. This can be done through a cash transaction in exchange for crypto.
• Use a crypto debit card: Some platforms, such as Bybit, MEXC, and KuCoin, allow the purchase of crypto without KYC verification. This may be an option for minors who have access to a credit or debit card. However, some banks may restrict crypto purchases.
• Trade goods or services for crypto: Minors can start a physical or online business that accepts payment in crypto. The earned crypto can be stored in a wallet until the minor turns 18.
• Participate in airdrops and bounties: This method requires holding existing crypto. Some blockchain projects will distribute airdrops and bounties to increase awareness of their project.
• Buy crypto with gift cards: P2P platforms offer multiple payment options, including prepaid cards and gift cards, which can be converted into crypto.
• Participate in a crypto rewards program: These programs are usually tied to promoting blockchain projects and can be a great way for minors to earn free crypto.
• Open a joint brokerage account: A parent can open a joint brokerage account with their child. This allows the minor to have joint ownership of the account and the crypto assets.
• Use a custodial account: A parent or guardian can open a custodial account on behalf of the minor. The assets in the account legally belong to the minor, and they can hold major cryptocurrencies such as Bitcoin and Ethereum. EarlyBird and UNest are examples of companies that offer custodial accounts for crypto.

It is important to remember that investing in cryptocurrency carries significant risks and is not suitable for everyone. Minors should always seek the guidance of a parent or guardian before making any investment decisions.

Frequently asked questions