How old do you have to be to invest in crypto?

How old do you have to be to invest in crypto?

Robert McDougall 

January 8, 2024

Cryptocurrency

Investing in and trading cryptocurrency has been previously hailed as the future of finance in the U.S. 

Individuals have been flocking to this new system of trading digital currencies ever since finding out that these digital currencies exist on a decentralized network without any controlling party. Its ultra secure nature also lends itself perfectly to young individuals looking to learn more about investing. 

That said, this new financial framework is still in its early days and is yet to come up with clear “ground rules” regarding the age of investors. 

Age limits exist for a reason, whether that’s stopping children from making decisions that they’re not mature enough to make or for preventing private and government institutions from taking advantage of them. 

Keeping all of that in mind, let’s take a look at what the exact age requirements are when it comes to investing in crypto.

The Legal Age to Invest in Cryptocurrency

Technically speaking, as of today there is no centralized legal age for trading or mining cryptocurrency. However, different countries and regions have imposed some restrictions on the buying and trading of cryptocurrencies which includes setting a legal age. 

On top of that, most regulated crypto exchanges also require that investors be 18 years or older to register for an account. While other platforms have decided to set an even higher age limit. 

Some crypto exchanges — like Coinbase — do allow minors to trade on the platform, but only through some strict parental controls, custodial accounts and other additional measures. This is done to ensure that they don’t make any significant trades by accident. 

With that said, let’s take a look at some of the age restrictions imposed by the top exchanges and countries on investing and trading in crypto. 

Age Restrictions Imposed by Crypto Exchanges

After the trial of Sam Bankman-Fried the CEO of FTX — a leading cryptocurrency exchange — many crypto exchanges have followed suit in setting up some age restrictions for buying and trading crypto

Here’s a list of the age limits imposed by top cryptocurrency exchanges:

For crypto exchanges that don’t have any age limits, we’d recommend exercising caution when trading as these platforms may be more susceptible to fraud or theft.

Legal Age to Invest in Cryptocurrency in Different Countries and Regions

As far as we’re aware, it is the local laws of the country or region you reside in that decide the age at which you can start investing in crypto. 

For instance, according to the recent March 23rd investor alert report, the Securities and Exchange commission (SEC) in the United States has determined that individuals who want to invest in crypto must be at least 18 years of age. 

These laws and regulations prevent underage traders from making risk filled investments that they may not fully comprehend. On top of that, the report also states that the SEC also requires traders to provide their proof of reserves and address before going into business with an investment firm or broker. 

Here are some of the existing laws set up by other countries and regions regarding the age limit for investing in cryptocurrency:

United Kingdom

According to the July 2019 guidance on crypto assets report, the Financial Conduct Authority (FCA) in the UK has set a minimum age limit of 18 years old for investing in crypto. 

Europe

Most countries in Europe have followed the UK’s footsteps by imposing a minimum age limit of 18 years old for investing in crypto. Some countries have even increased that minimum age limit to 21, in keeping with their stricter laws and regulations. 

Asia

The laws and regulations regarding crypto trading and investments are still uncertain in the region. However, some countries — like Pakistan, Bangladesh, and China — have imposed total restrictions on cryptocurrency usage whereas others such as Singapore, Japan and India have accepted it.

For these countries, the minimum age limit for trading cryptocurrencies is set to 18.

Exceptions and Loopholes

Currently, most of the top crypto exchanges don’t allow minors to buy crypto until they reach the age of 18. However, if you possess a strong desire to invest, there are 3 loopholes underage investors target:

How to Open a Crypto Investment Account for Kids

Here’s a more detailed description of how these accounts work and how you can set them up. 

Custodial Account

Custodial accounts are typically the same as traditional brokerage accounts in the sense that they also hold mutual funds and stocks. Just recently, these accounts have also started holding major cryptocurrencies like Bitcoin and Ethereum to attract the younger population interested in digital assets. 

There are two main types of custodial accounts that parents or guardians can open. 

  • 1. The first is a Uniform Transfer to Minors Act (UTMA) account, enabling minors to trade in various assets, including property and cryptocurrencies, upon reaching the appropriate age
  • 2. The second type is a Uniform Gifts to Minors Act (UGMA) account, allowing minors to receive gifts of cryptocurrencies and other assets. These gifts can be easily withdrawn by the beneficiaries once they turn 18

Although adults make the investment decisions for these accounts, the assets are transferred to the children or beneficiaries when they reach the legal age of 18.

Currently, there are multiple apps that allow parents or guardians to set up a UGMA account. The best among them are EarlyBird and Unest — both apps are available on the iOS app store and Google play store. 

Joint Brokerage Accounts

Unlike a custodial account, joint brokerage accounts can be owned by any two individuals, provided that one of them is an adult. 

In this way you can open and own a joint account with your parent or guardian that can then be used to buy and trade cryptocurrency. 

Another key difference between a custodial account and joint brokerage account is that both owners have equal rights when it comes to deciding the investments they’re going to make. You just make sure that the account you’re opening can indeed support the coins you’d like to acquire. 

Lastly, you should know that this account will need both owners' private keys to make or cancel a transaction, hence the equal rights.

Why Age Matters in Crypto Investing

According to us, minors under the age of 18 should not be investing in the crypto market, at least not on their own. The reason being that these markets are extremely volatile and difficult to predict. Which essentially means that if a minor does end up making a potentially risky investment, they could end up with huge losses and end up shattering their own confidence at an early age.

To add to that, minors on their own might not be educated or experienced enough to recognize when they’re being scammed or cheated out of their own assets. For example, in a report constructed by Internet Matters, 46% of all children identified investing in crypto as a risky endeavor mainly due to their concerns of falling for a scam or a fraud. 

Obviously, scams and frauds are going to be a part of every market. However, there’s still a bit of wisdom in a parent allowing their child to reach the age of maturity before they invest in the crypto market. As their additional education on the topic could prevent them from getting caught up in these scams. 

All in all, investments in the crypto market require a high level of financial literacy and maturity in investment decision making — which isn’t always the forte of teenagers. This is why if you do decide to invest in crypto, make sure you consult a trusted adult in your life for guidance.

Tips for Young Investors Interested in Cryptocurrency

As a young adult living in the digital age, we understand that the appeal of investing in cryptocurrency may be difficult to resist. However, there are a few things you need to consider before you embark on this potentially risky investment journey.

Invest in Anti-Fraud Courses 

First of all, we’d advise that you invest some of your money and enroll in an anti-fraud course that focuses on online scams related to crypto assets. 

From these courses you should learn to identify fraudulent transactions, scam artists and one of the newest threats to underage investors: paid-for scam advertising. 

Common Scams

Recently, the most common kind of fraudulent transactions involve scammers investing considerable resources in creating fraudulent Initial Coin Offerings (ICOs). 

These ICOs usually come from a supposedly reputable exchange or platform that offers individuals the chance to invest in a highly profitable new cryptocurrency coin. But in reality, these exchanges and the ICOs are fake and the funds raised are stolen. 

Some fake exchanges offering ICOs also create deceptive ads designed to entice individuals — specifically the younger population — into investing and earning quick profits in the cryptocurrency space. 

Fortunately, as we mentioned before there are several detailed anti-fraud courses to protect yourself from these frauds. 

Anti-Fraud Courses

These courses provide information on how most of the scams listed above work. In addition to how you can protect yourself from them. 

  • Cryptocurrency and Fraud Prevention Course by Udemy
  • CoinMarketCap’s numerous articles on best security practices involving cryptocurrency
  • Cryptocurrency Security Standards (CCSS) which explains all the existing security standards involving cryptocurrency investments and trading

Do Your Research on Crypto Markets

It goes without saying that you should learn how crypto markets work, before you venture out on your investment journey. You should also have a basic knowledge of which coins are currently doing well and how you can turn a profit from your investment.  

We’d suggest beginning with understanding the blockchain technology that governs the laws behind cryptocurrencies. Understanding how this technology works is crucial to figuring out how your crypto assets remain safe and how profit is generated from owning them. 

Your next step should be to gather a list of reputable sources where you can gather your information about the latest trends in the crypto world. These news sources will also help you learn about the details behind a specific coin that you’re interested in. Details such as the coin’s purpose, team, community, trading volume and market capitalization. 

Only after absorbing all of this information should you decide which coin you’re going to invest in. 

Do not Buy Coins from Ebay

We’d also advise against buying coins from e-commerce platforms like Ebay. Not only do Ebay sellers charge much higher than the standard rate for these coins, but plenty of them have also been linked to crypto scams. 

Non Delivery Scam

Among the most common scams in the crypto industry is the non-delivery scheme. Scammers on the platform may agree to send Bitcoin after the payment but never actually transfer the coins. They employ delay tactics, provide excuses, and eventually disappear from the platform. 

We often see these scammers keeping users engaged for months, only to send an email later, claiming transaction issues. When users request a refund, scammers may either claim to have spent the funds or deactivate their account altogether. 

It surprises us that even reputable sellers sometimes employ this tactic, making it increasingly difficult to identify and combat such scammers.

Fake Listings 

Another well known scam is the creation of fake listings. Scammers create these fake listings and put up images and descriptions of Bitcoin when in reality they have no intention of selling you the cryptocurrency. 

An easy way to detect these scammers is by reading the description of their listing. Most of them don’t put in too much effort in writing these descriptions and instead just copy-paste the definition of the coin they’re selling directly from the source website. 

On top of that, these fake listings also offer these coins at a rate that’s significantly lower than the standard. Making buyers think that they’re getting these coins at a premium. 

Conclusion

In summary, while there is no specific age limit for owning cryptocurrency, most top crypto exchanges have restrictions, prohibiting individuals under 18 from investing or trading. Moreover, countries like the US, UK, and various nations in Europe and Asia have imposed regulations on minors' involvement in crypto investments. 

Therefore, it is crucial to thoroughly understand your local laws before engaging in cryptocurrency activities. This knowledge may uncover potential loopholes, such as utilizing custodial or joint brokerage accounts, enabling investment within legal boundaries.


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