Can You Invest in Crypto Under 18?

Interest in cryptocurrency has expanded significantly, prompting many, including younger individuals, to explore digital asset investments. For those under 18, investing in this evolving financial landscape raises specific questions about legal access and participation. This article clarifies the general requirements and available pathways for younger investors.

Understanding Age Requirements for Crypto Investment

Individuals under the age of 18 face direct legal barriers to investing in cryptocurrency. In the United States, the age of majority, typically 18, dictates a person’s capacity to enter into legally binding contracts. Since opening an account with a cryptocurrency exchange or trading platform involves agreeing to terms and conditions, minors are unable to do so independently.

Centralized cryptocurrency exchanges, the primary gateways for buying and selling digital assets, enforce these age restrictions. These platforms must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. KYC procedures require users to verify their identity by submitting government-issued identification, such as a driver’s license or passport, which minors typically do not possess. These measures prevent financial crimes and protect consumers from volatile market risks.

Therefore, most major centralized cryptocurrency exchanges require users to be at least 18 years old to create an account. While owning cryptocurrency itself might not have a universal age limit, acquiring and trading it through regulated channels necessitates adherence to these age and identity verification protocols.

Pathways for Minor Crypto Investment

Despite the general prohibition against direct investment by minors, several indirect pathways exist through adult involvement. The most common method involves a parent or legal guardian establishing and managing an account on behalf of the minor. This approach leverages the adult’s legal capacity to navigate the financial landscape while designating assets for the minor’s benefit.

One popular structure for this is a custodial account, such as those established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). While these are not universally available for direct cryptocurrency holdings through all traditional brokerages, some specialized platforms and services are emerging that facilitate custodial crypto accounts. In these accounts, an adult acts as the custodian, controlling the assets until the minor reaches the age of majority, which is typically 18 or 21 depending on the specific state law.

To set up such an arrangement, a parent or guardian would open an account in their name, often through a platform that explicitly supports custodial features for digital assets. The account is legally owned by the minor, but the custodian maintains management oversight and decision-making authority over the assets. Contributions made to these accounts are generally irrevocable, meaning they cannot be taken back once gifted to the minor. The investment earnings within these accounts are taxed under the minor’s Social Security Number, which can sometimes result in a lower tax liability compared to if they were taxed at the parent’s rate.

Parental Guidance and Account Management

When a parent or legal guardian facilitates a minor’s cryptocurrency investment, their role extends beyond merely opening an account; it encompasses ongoing management and education. Active parental involvement is important for overseeing the digital assets and guiding the minor through financial concepts. This oversight includes monitoring transactions, understanding market dynamics, and safeguarding the assets held within the account.

Parents often choose to hold the cryptocurrency in a secure manner, such as in a “cold wallet” (an offline storage device) or a specialized custodial account, until the minor reaches adulthood. This approach ensures the assets are protected while providing a structured way for the minor to eventually gain control. When the minor reaches the age of majority, the assets are transferred directly to their control, completing the custodial arrangement. This transfer can involve gifting a hardware wallet containing the cryptocurrency or moving the assets to the now-adult child’s personal exchange account.

Parents also have a role in educating their children about financial responsibility and the nature of digital assets. They can teach about the importance of security practices, such as managing private keys and avoiding scams. Regarding tax implications, gifts of cryptocurrency, like other assets, are subject to annual gift tax exclusion limits. For example, in 2025, gifts under $19,000 per individual do not require the giver to file a gift tax return or incur gift tax. If the gifted amount exceeds this threshold, the giver must file IRS Form 709.