How to Buy Cryptocurrency If You Are a Minor

Cryptocurrency interests younger generations, but minors generally cannot directly purchase or hold it. Financial contracts, including crypto transactions, are subject to legal age restrictions and Know Your Customer (KYC) regulations. Adult involvement is a necessary step for minors to engage with cryptocurrency.

Legal Framework for Minors and Cryptocurrency

Minors cannot enter into financial contracts directly, including those for cryptocurrency exchanges. The legal age for a binding contract is 18 in most states, though some set it at 19. This protects individuals who may not yet fully understand the complexities of such agreements.

Cryptocurrency exchanges operate under strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. These regulations mandate identity verification to prevent fraud and illicit activities. The KYC process requires users to provide personal data such as name, date of birth, address, and government-issued identification. Platforms require users to be at least 18 or 21 years old, depending on the specific platform and state regulations.

Acquisition Methods for Minors

Adult oversight is required for minors to acquire cryptocurrency. One common approach is through custodial accounts, such as those established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). A parent or legal guardian opens and controls them for the minor’s benefit. The adult custodian manages the assets until the minor reaches the age of majority, which is 18 or 21, depending on the state.

Another method is gifting cryptocurrency, where an adult purchases and transfers digital assets to a minor. This can be to a wallet controlled by the adult on behalf of the minor, or directly to a minor’s wallet. Gifts of cryptocurrency are treated as property under U.S. tax law and follow gift tax rules. For 2025, gifts under $19,000 per recipient are exempt from gift tax and reporting. If the gift exceeds this annual exclusion, the donor must file IRS Form 709, though taxes may not be due immediately if the lifetime gift tax exemption is utilized. The recipient will be subject to capital gains tax when they sell, trade, or otherwise dispose of the gifted cryptocurrency.

Opening and Managing Custodial Cryptocurrency Accounts

Establishing a custodial cryptocurrency account for a minor begins with selecting a suitable platform. Parents and guardians should choose reputable exchanges or financial platforms that offer custodial options or are suitable for managing assets for a minor. Consider robust security, regulatory compliance, and ease of use. Some platforms may cater specifically to family accounts, offering features like parental controls and educational resources.

Once a platform is chosen, the parent or guardian sets up the account. This involves registering an account in the adult’s name and completing the required KYC process. Documentation includes the parent’s government-issued identification, proof of address, and potentially the minor’s birth certificate or Social Security number for beneficiary designation. After identity verification, the parent can link a bank account or other funding method.

Funding the account and purchasing cryptocurrency follows the platform’s standard procedures. The parent deposits fiat currency and uses it to buy cryptocurrencies. Parents should understand the specific fees associated with deposits, trades, and withdrawals, as these can vary significantly between platforms. The parent maintains full control over these transactions, acting as the custodian for the minor’s benefit.

Managing the custodial cryptocurrency account involves security vigilance and educating the minor about financial responsibility. Strong, unique passwords and two-factor authentication (2FA) are fundamental security practices. Using hardware security keys for 2FA, where available, offers a higher level of protection than SMS-based verification. For significant holdings, cold storage solutions, such as hardware wallets, can provide enhanced security by keeping private keys offline and away from internet-connected devices, reducing vulnerability to hacks.

The parent is responsible for securing private keys, whether held by the exchange or in a personal wallet. Regularly updating software and being wary of phishing scams are additional measures to protect assets. Beyond technical security, parents should educate the minor about the volatile nature of cryptocurrency markets, the risks of scams, and financial literacy.