Whether it’s due to the ever-increasing inflation or global economic uncertainty, the crypto market as a whole is on the rise. In 2023, we’ve seen Bitcoin go from barely touching 17,000 USD to hitting a peak of 44,000 USD by the end of the year. 

During this period, we’ve also observed an increasing number of young people in their late teens and early twenties take an interest in crypto and think about building a portfolio. But, is it even legal for teens to invest in crypto? Is there a minimum age limit? Let’s take a closer look at the laws and regulations surrounding cryptocurrencies to find out.

Understanding Cryptocurrency and Its Accessibility

Before we get into the legalities, let’s establish a clear definition of what crypto even is. 

In essence, cryptocurrency is a type of digital currency that is not controlled by any single bank or government entity. Instead, the task of authenticating and verifying crypto transactions is carried out by a network of computers called the blockchain. 

Some of the most popular cryptocurrencies in the world include:

According to our research, there are nearly 23,000 unique crypto coins on the market, each with its own purpose and goals. USDT, for example, is pegged against the US dollar to provide a stable digital asset to crypto investors. BNB, on the other hand, is used for paying fees on the largest crypto exchange, Binance. 

General accessibility of cryptocurrency and factors affecting it

At its core, most cryptocurrencies are accessible to almost everyone on this planet. We can safely say that there is nothing in the code and underlying network of crypto assets that prevents people of a certain age, race, gender, or religion from owning them.

Unfortunately, things aren’t as ideal in the real world. Factors like government regulation can make trading crypto illegal for people in a certain country. Some regions that have implemented such policies include China, Nepal, Egypt, and Pakistan.

So, are there any government regulations regarding the minimum age for trading or owning crypto? Here’s what we know.

Legal Age Requirements for Cryptocurrency Purchases

As far as we’re aware, there are no laws that clearly dictate a legal age requirement for cryptocurrency purchases. That said, you will still find it difficult to purchase crypto if you’re under the age of 18 as most of the popular crypto exchanges like Binance, Kraken, and Coinbase don’t allow users that are under this age. 

The reason for this ban on underage users is that in most countries, crypto exchanges follow the legal age for general financial transactions which is 18.

Legal reasons behind age limitations

In essence, the legal reasons behind age limitations for cryptocurrency purchases are rooted in consumer protection and regulatory concerns. Crypto transactions involve financial risks, and regulatory bodies aim to ensure that individuals engaging in these activities have the legal capacity to understand these risks.

Plus, as we discussed above, these regulations are originally related to the legal age for traditional financial transactions which is also 18. For example, in most jurisdictions, people under the age of 18 cannot get a credit card in their name.

How Exchanges Enforce Age Restrictions

We briefly mentioned how crypto exchanges don’t allow underage users to purchase or trade crypto on their platform. But how do they know the age of their user? The answer to this comes down to KYC verification.

What is KYC verification?

KYC or Know Your Customer is a set of regulations that require financial institutes to identify their users. These regulations are put in place to prevent financial crimes such as money laundering and terrorism financing. 

In accordance with these KYC regulations, most crypto exchanges require their users to verify their identity by providing a government issued ID. For most exchanges, new users cannot purchase, sell, or trade crypto until they complete this KYC verification.

The requirements for this verification process can vary between different exchanges, but a few elements like a legal ID and address are mandatory for each one of them. Plus, some exchanges like Binance even have different verification tiers based on the amount of information you’ve provided to the platform, with higher tiers coming with discounts and special offers. 

However, not every crypto exchange requires KYC. Here is a list of no-KYC crypto exchanges, which enable users to buy and trade crypto without ID. This means that even if you are under 18, you can buy crypto anonymously.

Alternatives and Workarounds for Underage Users

While the over-18 requirements on this matter are quite clear, there are actually a number of alternatives available for minors. Among the many options, these are the ones that we’ve found to be most reliable:

No KYC exchanges

There are some no-KYC crypto exchanges like MEXC that don’t require you to provide any ID to trade crypto on their platform. You can use the P2P services of these exchanges to purchase crypto directly from another investor and then use the purchased crypto assets to trade.

Custodial accounts

In essence, custodial accounts are group accounts where parents can create crypto accounts for their children and purchase cryptocurrencies for them.

Parental guidance

Parents can also create accounts on crypto exchanges in their own names and then purchase the crypto on behalf of their minor child. Once the child goes over the age of 18, they can create their own account and transfer the purchased crypto from their parent's account to their personal wallet. 

Associated risk

While these alternatives do work, they are not as safe. That’s why we highly advise you to practice caution when using any of these alternatives, especially exchanges without KYC as they can be a breeding ground for scammers.

Importance of Education and Safety in Crypto Investments

All things considered, cryptocurrency is still a fairly new market that’s also evolving constantly. This is why understanding the fundamentals of blockchain technology, the risks & volatility associated with crypto investments, and the importance of security measures is crucial. This applies to all investors but is especially true for minors. 

Plus, if you’re under the age of 18 and want to invest in crypto, but don’t want to use unsafe alternatives either, this is the perfect time for you to educate yourself. We recommend learning about the different trading strategies, ways to manage risk, and methods for maximizing profit. This way, you’ll be ready for success when the time arrives.