How Old Do You Have to Be to Invest in Crypto?
Cryptocurrency is decentralized, so there aren’t any enforceable age restrictions on owning cryptocurrency. However, you’ll encounter age restrictions when buying crypto through an exchange or broker. So, how old do you have to be to invest in crypto? Many popular crypto exchanges, such as Coinbase and Kraken, enforce a minimum age of 18 for customers.
As a practical matter, this age restriction parallels the age restrictions for bank accounts, which are the primary way to fund crypto purchases. In most states in the US, you must be eighteen to have your own bank account, custodial accounts aside. Ditto for debit cards and credit cards. Eighteen is the magic number.
Can minors buy crypto? It’s tricky. Can minors own and use crypto? Yes, they can! Anyone of any age with a crypto wallet can use cryptocurrency and decentralized finance (DeFi) platforms. Let’s explore the topic further to see how it all works and how kids can begin learning about crypto even before the age of 18.
What Is The Minimum Age Requirement for Buying Crypto?
How old do you have to be to buy Bitcoin? Most centralized exchanges, like Coinbase, or brokerages, like eToro, enforce a minimum age of eighteen to transact on the platform and buy Bitcoin or other cryptocurrencies.
Coinbase’s User Agreement for US customers states, “You must be at least 18 years old,” among other eligibility criteria.
eToro takes a similar stance in saying, “It’s our policy at eToro that you must be at least 18 years old,” referring to “real money” accounts. While eToro offers a demo account with virtual assets, you must be at least 18 years old to buy real assets and crypto.
Unsurprisingly, Kraken sets the age threshold at 18 as well.
These age restrictions commonly found on centralized exchanges create roadblocks for kids buying crypto. However, they don’t stop kids from owning crypto.
Some providers, such as EarlyBird, offer custodial accounts, allowing kids to start building an investment portfolio that can include Bitcoin and Ethereum. Similarly, Cash App supports Sponsor Accounts, allowing minors as young as 13 to buy or receive Bitcoin with limits set by the Sponsor, typically a parent.
Or, you can consider more direct methods. Most of us received cash in a card as a birthday gift or earned some money mowing a neighbor’s lawn as kids. Crypto can work in the same way. Anyone who has crypto can send it to any other compatible crypto wallet, much like handing someone a $20 bill. Age doesn’t matter in these types of transactions.
Next, let’s discuss why these peer-to-peer transactions differ from buying crypto through an exchange.
Why Are There Age Restrictions for Buying Crypto?
The age restrictions surrounding crypto purchases parallel those of owning a bank account in many jurisdictions. However, in both cases, the age requirements center on contract law. In the US, for example, you must be 18 years old to enter a legally binding contract.
We don’t often think of it this way, but a bank account is a contract, and so is an agreement with a crypto exchange. To enforce the agreement, the financial institution must ensure that the contract is valid. That’s where the age restriction comes into play.
According to Nolo, all signers of a contract must have “contractual capacity,” meaning the ability to understand and agree to a contract. In the eyes of the law, minors (those under 18) don’t have contractual capacity, with limited exceptions.
It all comes down to enforceability. Financial services providers can’t enforce a contract that may be voided due to a lack of contractual capacity. For all intents and purposes, minors can’t purchase crypto on major exchanges because the cryptocurrency exchange can’t enforce the contract.
Are Crypto Age Requirements Enforceable?
In many jurisdictions, financial institutions must follow KYC (Know Your Customers) regulations. These regulations arose from anti-money laundering (AML) rules and efforts to counter the financing of terrorism (CFT).
Part of this regulatory compliance requires identity verification. Most centralized exchanges require users to provide a copy of a government-issued identification, such as a driver’s license or passport. They also partner with third-party companies to verify the authenticity of the provided documents.
So, do you need to be 18 to buy crypto? In nearly all cases, the answer is yes. KYC requirements make it difficult to impossible to sidestep the minimum age of 18 to buy crypto.
Does that mean kids can’t use crypto? No, not at all. Kids can use crypto to transact with other people who use crypto and they can even access decentralized finance platforms. While getting the crypto in the first place may be challenging, once they have a funded crypto wallet, they can explore the ends of the crypto universe.
Some decentralized crypto platforms may bury age restrictions in their terms of service. You may also encounter similar restrictions based on location. However, these restrictions only affect the user interface. Under the hood, decentralized crypto platforms use smart contracts, which are computer programs that run on the blockchain. These smart contracts can be accessed from anywhere in the world, with or without the user interface.
How Do You Explain Crypto to Kids?
Money conversations with kids often start with savings lessons and piggy banks. Crypto differs in that it’s all numbers on a screen rather than physical coins and bills kids can spend. Many adults grapple with the same issue: You can’t touch it, so how can it be real money?
If you already own some crypto, you can show your kids your portfolio. Explain that cryptocurrency is an alternative to traditional money and that its value in dollars can rise or fall.
This might be a good time to explain that all money is based on acceptance and that money has taken more forms throughout history than we can count. Will Bitcoin be the next universal currency? We don’t know, but it’s growing in popularity, and its value has increased over time. By contrast, traditional currencies decrease in value.
You might also consider making a purchase with Bitcoin. A growing number of retailers accept crypto for purchase, including Newegg and Overstock. You can even load a Starbucks card with Bitcoin and take your kids out for a pastry treat funded with crypto.
During the conversation, explain that crypto is not supported by the government yet and that makes its value speculative. A bet on crypto is a bet that more and more people will start using cryptocurrencies. You’ll probably also want to mention that most cryptocurrencies won’t survive, but a few might change the way that we use money.
When Is a Good Time to Teach Your Child About Crypto?
Many suggest that the preteen years are the best time to begin teaching kids about cryptocurrency. By their teen years, kids have already learned about crypto elsewhere but may have some misconceptions about what it is and how it works. It’s much easier to explain it correctly when they are old enough to understand than it is to grapple with inaccurate information or misconceptions.
How Can You Gift Crypto to a Child?
While kids often can’t buy crypto directly, you can give crypto as a gift. Due to challenges related to age, the easiest way to do this usually involves setting up a crypto wallet and sending crypto to the new wallet owned by your child.
You can choose a hot wallet, which is an app, or a cold wallet, a hardware device that stores the wallet’s keys offline. Hardware wallets offer more safety but require a purchase and can be less convenient for daily use.
For example, you can get a Bitcoin wallet, back up the recovery phrase offline, and then send Bitcoin to that wallet as a gift.
Be aware that standard crypto wallets don’t let you control when and how your child spends the Bitcoin in the wallet. If needed, you can also set up a multisig wallet. This type of wallet uses or more other wallets as “signers.” While more complicated, this strategy prevents any Bitcoin from leaving the wallet unless both signers approve the transaction.
Be sure to choose a wallet that supports the type of cryptocurrency you want to send as a gift.
Advice for Young Crypto Investors to Stay Safe
Crypto is largely unregulated, so scams abound. Although today’s youth are often more savvy in some ways than more trusting adults, following simple best practices can help keep them safer when exploring the crypto world.
- Choose a trustworthy wallet. Teaching kids about crypto starts with learning how to safely store their crypto. Look for a well-established wallet provider.
- Back up the wallet seed phrase. The wallet’s seed phrase, also known as a recovery phrase, allow you recover the wallet or perhaps move it to another app. Back it up and store it safely offline.
- Don’t share the seed phrase or private key. Anyone with the private key can can access the funds in the crypto wallet.
- Be wary of online interactions. Discuss online safety with your kids and extend the conversation to crypto. Scams abound.
- Think twice before sending crypto to anyone. Unlike traditional finance, crypto transactions are final. There’s no way to do a chargeback like you can with a credit card. Check the details carefully, including the receiving wallet address, and remember, a crypto transaction is forever.
- Read the docs for protocols. Once kids have a crypto wallet, they may be able to use decentralized finance (DeFi) protocols. While these can offer profit opportunities, they can also bring risks. Teach your kids to do their own research before using any blockchain protocols.
- Go slow. Start with smaller transactions or just HODL (hold for future gains). A crypto stack given as a gift can disappear quickly without precautions. Remember, you can send smaller amounts as gifts, adding to the wallet over time.
Conclusion
How old do you have to be to invest in crypto? In most cases, the answer is 18. Age 18 is the age of majority in many jurisdictions, making it the age at which people can engage in a legally binding contract. However, there are some workarounds. For example, Cash App supports Sponsor Accounts, which allow supervised transactions. You can also send crypto to someone under 18 as a gift or payment for doing a job. To do this, the recipient must have a compatible crypto wallet. Currently, there are no enforceable restrictions for people under age 18 using or owning crypto.
FAQs
Is it possible to buy crypto under 18?
Most exchanges, such as Coinbase and Kraken, don’t allow users under the age of 18 to buy crypto. However, Cash App and EarlyBird both offer ways to invest with a supervised account, typically managed by a parent or guardian.
What happens if you get caught buying crypto under 18?
If you make an account on a crypto exchange that violates the terms and conditions, such as an age restriction, the exchange can close the account.
Can you buy crypto for your child?
Yes. You can buy crypto and send it to a crypto wallet that belongs to your child.
Is 18 the minimum age requirement to buy crypto in all countries?
The most common age requirement to buy cryptocurrencies worldwide is 18. However, rules vary by jurisdiction. Those under 18 may also be able to buy cryptocurrencies through a custodial account, such as Cash App’s Sponsor Accounts.
Is it a good idea to teach children about crypto?
Yes. Bitcoin is no longer a fringe asset, and Ethereum powers an ever-expanding universe of smart contract platforms. While the future of cryptocurrencies as a primary form of money remains to be seen, it’s wise to teach kids about crypto and share best practices to stay safe in their transactions.
References
- Coinbase User Agreement (coinbase.com)
- How old do I need to be to trade with eToro? (etoro.com)
- Verification level requirements (kraken.com)
- How to Buy and Sell Bitcoin with a Sponsored Account (cash.app)
- Who Lacks the Capacity to Contract? (nolo.com)
- Anti-Money Laundering (AML) (finra.org)
- Anti-Money Laundering and Countering the Financing of Terrorism (state.gov)
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Anatol Antonovici 
Ines S. Tavares