There are no age restrictions on owning cryptocurrency, but age restrictions are imposed when buying crypto through an exchange or broker. Many crypto platforms, such as Coinbase, Paypal and Kraken, require users to be at least 18 years old. This is because, in most countries, individuals under the age of 18 are not considered mature enough to take full responsibility for certain aspects of life, such as finances. However, there are some ways for minors to invest in cryptocurrencies, such as through custodial accounts or with the help of a parent or guardian.
Characteristics | Values |
---|---|
Age restriction for trading or mining cryptocurrencies | None |
Age restriction for crypto platforms like Coinbase, Paypal, Kraken | 18 |
Age restriction for bank accounts in most US states | 18 |
Age restriction for Cash App Sponsor Accounts | 13 |
Age restriction for EarlyBird custodial accounts | None |
Age restriction for custodial accounts | Depends on the region |
Age restriction for buying crypto | 18 or 21 |
What You'll Learn
No age limit to own crypto
There is no minimum age to use or own cryptocurrency. However, many crypto apps and exchanges that are based in the US require that registrants be at least 18 years old to register. Platforms like Coinbase and Paypal impose this minimum age restriction.
If you are a teenager, the best thing you can do is continue learning about cryptocurrency and how it's changing the financial world. If you want to invest a small amount of money in this new asset, you can do so through a custodial account or an approved crypto app.
Cryptocurrency is a new and disruptive technology that offers another way to transact business as well as to invest. Bitcoin and other top cryptocurrencies have, at times, provided impressive returns. However, investing in crypto remains very speculative, and the potential for loss is much greater than with most other investments.
If you are a parent who wants to give your child cryptocurrency, you can set up a UGMA custodial account and name your child as the beneficiary, create a designated digital wallet for your child, or give your child a hardware wallet.
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Age 18 for crypto exchanges
While there are no age restrictions on owning cryptocurrency, age restrictions are imposed when buying crypto through an exchange or broker. Many popular crypto exchanges enforce a minimum age of 18 for customers. This includes exchanges such as Coinbase, Kraken, and Paypal.
The age restriction parallels the age restrictions for bank accounts, which are the primary way to fund crypto purchases. In most US states, you must be 18 to have your own bank account. The same goes for debit and credit cards.
These age restrictions are based on contract law. In the US, you must be 18 to enter a legally binding contract. A bank account is a contract, and so is an agreement with a crypto exchange. Financial institutions must ensure that the contract is valid, and so the age restriction is put in place.
Regulated platforms use Know-Your-Customer (KYC) protocols to ensure users are at least 18 before allowing them to create an account and start trading. Exchanges also ask users to verify their identity by providing photos of identification documents and taking selfies.
Some providers, such as Cash App and EarlyBird, offer supervised accounts, typically managed by a parent or guardian, which allow minors to invest.
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No law against minors investing
There are no laws against minors investing in cryptocurrencies. However, there are some important barriers to entry that minors should be aware of. Firstly, most U.S.-based crypto exchanges, such as Coinbase and Binance.US, require users to be at least 18 years old. This is because crypto investing is considered high-risk and mostly unregulated, so minors should only invest amounts that they or their parents are comfortable losing.
If a minor wants to invest in cryptocurrencies, the best way to do so is through a custodial account or with the help of a parent or guardian. A custodial account is an adult-managed investment account that allows a parent or guardian to open an account on behalf of a minor. The assets in the account legally belong to the minor, but the adult has control over the account until the minor reaches the age of majority. EarlyBird and UNest are two platforms that offer custodial accounts for cryptocurrencies.
Alternatively, minors can also invest with the help of a parent or guardian by setting up a joint brokerage account. This allows the minor to have more direct control over their investments, but it is important to remember that the volatility of cryptocurrencies means that there is a high risk of losing money.
While there is no minimum age to use cryptocurrency, it is important for minors to carefully consider the risks involved before investing. Cryptocurrencies are highly volatile and speculative, meaning that prices can fluctuate widely and quickly. Additionally, there is a risk of scams and hacks, as well as potential regulatory problems in the future. As such, minors should only invest in cryptocurrencies with the guidance of a parent or guardian and should not invest more than they can afford to lose.
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Crypto is high-risk
There are no current regulations preventing minors from investing in cryptocurrencies, and people of any age can legally invest. However, crypto investing is high-risk and mostly unregulated, so caution should be exercised. Here are several reasons why crypto is considered a high-risk investment:
Volatility and Risk of Loss
Crypto assets are very risky due to their volatile and unpredictable nature. Prices can fluctuate dramatically and suddenly with little warning, and investors could lose some or all of their investment. The extreme price volatility in cryptocurrencies is caused by their decentralised nature, free from the control of governments or central banks. This means that their value is solely determined by market demand and supply, making them susceptible to rapid and significant changes.
Regulatory Uncertainty
The regulatory landscape surrounding crypto is uncertain and constantly evolving. Government regulations may impact how crypto is used or accessed, leading to potential restrictions on its use. The lack of clear, consistent guidelines from policymakers adds to the risk and uncertainty of investing in crypto.
Scams and Fraud
The decentralised nature of crypto also makes it vulnerable to scams and fraud. Fraudsters can target online wallet companies or crypto exchanges to steal investors' keys and gain unauthorised access to their wallets and assets. Additionally, the lack of regulation means that key investor protections may be missing, such as the secure handling of client funds, safekeeping of assets, and protection of personal information.
Lack of Protection and Insurance
In many jurisdictions, cryptocurrencies do not offer the same legal protections as traditional payment methods like credit cards. Transactions made with crypto are typically irreversible, and there is no guarantee of recovering funds in cases of disputes or fraud. Furthermore, crypto assets are not covered by protection funds or federal and provincial/territorial deposit insurance plans in some countries, increasing the risk of losing investments.
High Fees
Crypto transactions may come with higher fees compared to investing in stocks, bonds, or mutual funds. These fees can impact overall returns and add to the risk of investing in crypto.
In conclusion, while crypto investing may offer high return potential, it is a highly volatile and risky endeavour. Investors should carefully consider these risks and only invest if they are comfortable with the potential for significant losses. Education and research are crucial before entering the crypto market.
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Crypto wallets for minors
While there are no age restrictions for self-controlled crypto wallets, wallets that are part of a regulated crypto exchange are limited to users who are 18 or older. However, minors can still access crypto wallets with parental guidance and supervision. Here are some options and considerations for crypto wallets for minors:
Types of Crypto Wallets for Minors
There are different types of crypto wallets available for minors, each with its own pros and cons:
- Hot wallets: These are always online, allowing for quick transactions. They are also typically free to use, but they are more vulnerable to cyber-attacks due to their constant online presence.
- Cold wallets: Cold wallets provide enhanced security by storing data offline, meaning there are zero online hacking risks. However, they may require extra steps to transact and some hardware versions can be pricey.
- Joint accounts (multisig): These accounts offer shared control, making them ideal for group or family ventures. They provide enhanced security as multiple keys are needed for transactions. However, they can be complex to set up and require coordination among all parties to transact.
Top Picks for Teen-Approved Crypto Wallets
- MyEtherWallet: A popular choice for minors, but often requires parental consent or a joint account.
- MetaMask: Another widely-used option for minors interested in crypto, but parental consent is typically required.
- Trust Wallet: One of the go-to wallets for minors, but parental consent and supervision are usually necessary.
- Jaxx Liberty: This wallet has no age or account requirements. You can enter a 12-word key directly or let the app generate a new wallet for you.
- Atomic Wallet: Available on all platforms and devices, this wallet is decentralized, secure, and anonymous. It offers full control of your assets and allows you to buy, exchange, and stake crypto within the wallet.
- Samurai Wallet: A recommended option for minors.
- HODL Wallet: Suggested by users for minors interested in crypto.
Important Considerations for Crypto Wallets
When choosing a crypto wallet, it is essential to consider the following:
- Security: Opt for wallets with enhanced security features like two-factor authentication to protect your digital assets.
- User-friendliness: Choose a wallet that is easy to navigate and has a user-friendly interface, especially if you are new to crypto.
- Features: Look for wallets that offer a blend of security, usability, and cool features such as QR code scanning, in-built exchanges, and multi-currency support.
- Reputation: Do your research and check reviews to ensure the wallet is reputable and trusted by other users. Avoid wallets with unclear website details, negative reviews, or unverified sources.
- Compliance: Ensure that the wallet complies with local laws and the platform's terms of service, especially regarding age restrictions and parental consent.
Parental Guidance for Crypto Wallets
For parents, it is crucial to educate yourself and your teen about cryptocurrency and its potential risks. Here are some tips for overseeing your child's crypto activities:
- Educational resources: Provide educational resources to help your teen understand blockchain, crypto management, and risk assessment.
- Parental control features: Use apps that offer parental control features to monitor your teen's trading activities and set financial limits.
- Time constraints: Limit your teen's screen time on trading platforms to prevent overexposure, which can blur their sense of risk.
- Financial caps: Set spending limits and ensure your teen understands the potential for real losses.
- Profit and loss journals: Encourage your teen to maintain a trading journal, recording their trades, wins, and losses, to promote financial literacy and risk awareness.
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Frequently asked questions
While there are no age restrictions on owning cryptocurrency, many crypto platforms enforce a minimum age of 18. This includes popular exchanges such as Coinbase, Kraken, and Paypal.
This restriction parallels the age restrictions for bank accounts, which are the primary way to fund crypto purchases. In most US states, you must be 18 to have your own bank account.
Yes, minors can own and use crypto. Anyone of any age with a crypto wallet can use cryptocurrency and decentralised finance (DeFi) platforms. However, they will likely need help from an adult to buy crypto directly with fiat currency.
Minors can use custodial accounts, which are adult-managed investment accounts that allow a parent or guardian to manage an account on behalf of a child. They can also use sponsor accounts, which allow minors to make transactions with supervision.
Crypto is a very new and volatile investment option. It is considered speculative, meaning it is subject to extreme price fluctuations, and investors can lose all of their money. It is also currently unregulated, and there is a risk that some cryptocurrencies could be banned or restricted by governments in the future.