Crypto For Kids: What You Need to Know

January 3, 2022
financial literacy

A lot of people say that investing is a young person’s game — and it’s not hard to see why. 

Generation Z is composed of digital natives who have been raised around fintech. That’s why loads of under-18s have started to express a keen interest in cryptocurrencies (cryptos) and the sort of future financial freedoms early investment could offer them.

Unfortunately, buying crypto can be pretty tricky if you’re a kid. Although there are technically no age restrictions for purchasing cryptocurrencies, most exchanges and payment services do require traders to be at least 18 years old to set up an account.

Translation: if kids want to invest in crypto, an adult has to help them out.

This guide explains why kids can’t invest directly in crypto, the different ways an adult can buy crypto for kids, and why setting up a UGMA custodial account is one of the best options to invest in a child’s future using crypto. 

How Do You Explain Crypto to a Child? 

It’s one thing investing in crypto for a child — but explaining to them what crypto is and how it works is a whole different ball game.

So, what’s the best way to talk to kids about how crypto works?

Experts say the key here is to relate cryptocurrencies to something that kids already understand. For example, you could start introducing a child to cryptocurrencies by comparing them to the board game Monopoly.

In its most basic form, a crypto coin is just like the hotel tokens you use in Monopoly. You buy them with traditional money (in this case, your Monopoly money). But once you’ve got your hotels, they’re assets that can go up in value.

Illustration of woman holding child pointing at chart.

Unlike Monopoly money, crypto coins don’t have a fixed value. They’re worth as much as somebody is willing to pay for them. Similarly, if you buy a hotel in Monopoly for $100, but then another player offers to pay $200 for your hotel, its value has increased at no cost to yourself.

The other key difference you’ve got to drive home when talking to kids about crypto is that, unlike Monopoly tokens, crypto coins are totally digital. That means they’re all stored on computers, and you can’t see them or touch them — but just because you can’t touch them doesn’t mean you can’t use them to buy things.

They’re still assets that can appreciate in value, and you can trade them to somebody else for cash whenever you want.

If the kids in your life aren’t big on Monopoly (it does take quite an attention span), you can use other explanations that you think they’ll relate to.

But it’s definitely worth explaining crypto to the kids you love before you invest. This means they’ll understand and appreciate your investment way more, and it’ll also enhance their financial literacy skills along the way.

Can Kids Invest in Crypto?

Once you’ve explained to a child what cryptocurrency is and how it works, you may get them all excited to break their piggy banks and invest in crypto.

Unfortunately, kids can’t buy crypto — or at least they can’t directly buy crypto coins. But don’t worry because there are a few different workarounds you can deploy to help invest in a child’s financial future via cryptocurrencies.

It’s not hard to see why you’d want to invest in crypto on a child’s behalf. 

Over the last few years, the global crypto market has exploded in value. The total market capitalization of the crypto sector is now valued at a cool $2.38 trillion

Within that market, there are literally thousands of digital currencies you can invest in. Some rise and fall in value pretty quickly and can be somewhat volatile. But sector giants like Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Cardano (ADA), Litecoin (LTC), and Dogecoin (DOGE) have been around for a long time and proven to be sustainable investments.

Table showing current crypto market leaders.
(Image source)

To give you a rough idea, at the end of December 2021, the value of a single Bitcoin was more than $48,000. That’s certainly nothing to scoff at.

And while there are technically no age restrictions for trading crypto, most established sites such as Coinbase and Paypal require you to be at least 18 before you’re allowed to buy or sell crypto.

So, if you want to buy crypto for a child, you’ll have to do it yourself.

If you want to buy directly, you’ll need to choose a crypto broker, payment service provider, or crypto exchange.

The most popular option to buy crypto coins is to use a cryptocurrency exchange like industry leader Gemini. Unlike crypto brokerages, exchange service providers tend to be a lot more transparent and have way lower fees and service charges.

After you’ve selected the right exchange or broker, the next step you’ll need to take is to set up a digital wallet. This is normally a pretty straightforward process. You’ll have to register your details with the exchange or service provider — and in most cases, this will include some form of external identity verification.

For that reason, you might not be able to immediately start mining Bitcoins the minute you sign up with an exchange. 

You might have to wait a few hours so that the exchange can complete the necessary “Know Your Customer” (KYC) checks. But after that, you should be able to set up an encrypted digital wallet that only you have access to.

It’s then pretty simple to deposit traditional currencies like US dollars (USD) into your account and then purchase digital money with your USD.

After you’ve made that purchase, the transaction will get logged onto the public ledger (or "blockchain") for that currency. Blockchain technology keeps everything transparent so that everyone knows how many coins are in circulation.

You can then hold on to that crypto in your digital wallet for as long as you want. Once you’re ready, you can “cash out” by selling those coins back onto the market for traditional currency.

With any luck, your investment will have grown in value over that period of time to help you generate a nice, big gain.

How to Gift Crypto for Kids

We’ve already covered how you can buy a crypto coin as an adult. But if you purchase Bitcoin, Ethereum, or another type of digital currency yourself, it’s going to belong to you — not the children you want to invest in.

If you want to gift crypto you’ve bought to a child, you’re likely going to have to pursue one of three options. You can either set up a UGMA custodial account on that child’s behalf, create a designated digital wallet for the child, or gift them a hardware wallet.

Each gifting method goes hand-in-hand with its own set of pros and cons. But to help you get started, we’ll quickly dive into each crypto gifting method and how it works.

Set up a UGMA custodial account

Just like gifting stock or other financial securities to a child, your best bet when it comes to gifting crypto is to use a UGMA custodial account.

If you’re unfamiliar with custodial accounts, don’t stress. Just like common cryptocurrencies and other altcoins, custodial accounts are actually incredibly straightforward.

At its core, a custodial account is a flexible investment vehicle that allows adults to hold assets for kids until those kids reach adulthood.

With a custodial account, you name a child beneficiary. From that point onward, every asset you place into the account is the legal property of the child in question. But because underage kids aren’t allowed to make financial decisions, you’ve got to serve as the custodian of that account.

Illustration of woman sitting with infant below giant shield.

That makes you responsible for making any investment decisions and managing the assets in the account until the child reaches the “age of majority” in their state. The age of majority is the age at which a child is considered old enough to make their own financial choices — and in most states, that age is either 18 or 21.

There are quite a few UGMA account providers out there that will allow you to set up a custodial account for a child and invest in all of the more traditional asset classes like exchange-traded funds (ETFs), stocks, bonds, and mutual fund shares. But until recently, it was super difficult to hold crypto in a custodial account for a child.

Thankfully, EarlyBird has developed a simple solution.

We’re partnered with industry-leading crypto exchange Gemini so that adults can now invest in crypto for kids in one of two ways.

Your first option is to set up a crypto wallet through Gemini. You can then purchase crypto coins using your Gemini account before linking your Gemini wallet with an existing EarlyBird account. 

This means the contents of your digital wallet are now linked to the child’s custodial account — thus enabling them to benefit from the eventual gains your crypto investment may generate.

Although there are literally thousands of cryptos out there, we always want to ensure a degree of safety and sustainability in terms of the investments you’re making. 

That’s why, as of now, we’re enabling you to gift Bitcoin and Ethereum into a UGMA account. For everybody’s benefit, we’re making sure users stay away from cryptos that show more price volatility.

But buying crypto directly and linking it to a child’s UGMA account isn’t the only investment option you can pursue. 

EarlyBird also offers a pre-tailored portfolio option you can choose to invest your assets in when you set up an account with EarlyBird. This portfolio will include a small proportion of crypto in its overall asset mix to keep risk levels low and returns steady.

Create a designated digital wallet

By investing your crypto coins in a UGMA custodial account, your investments will normally work harder for you as a result of compound interest. Custodial accounts are also preferable if you want the crypto you’re giving to a child to actually belong to that kid.

That being said, another option you may want to consider is simply opening a normal digital wallet through a crypto exchange in your own name.

Screenshot showing mobile view of Gemini app.
(Image source)

When you set up a digital wallet, you’re then able to invest in that account by buying, selling, and holding crypto. 

This investment will be in your name, and it’ll belong to you. But there’s nothing stopping you from setting that account aside and holding onto the investment until a child is old enough to set up their own digital wallet.

After the kid you’ve been investing for finally does hit the age of majority, you can then just transfer the contents of your digital wallet to them.

But the risk with this strategy is that throughout that kid’s childhood, those crypto assets are technically your property. Despite your best intentions, you may be tempted to dig into that fund and make withdrawals even though you want to gift those assets to the child at a later date.

So, to keep the crypto you’ve set aside for kids as theirs, a custodial account is generally the better option.

Gift a hardware wallet

Another way you can buy crypto for kids before they reach age 18 is by purchasing crypto and storing it on a hardware wallet.

A hardware wallet, which is a type of cold wallet, is an offline piece of equipment that isn’t connected to the internet. Unlike a digital wallet, or hot wallet, you’ve got to download a crypto asset onto your wallet and then upload it back onto the network in order to sell it later.

(Image source)

A few different companies out there specialize in secure hardware wallets, and they generally take the form of large USB sticks or small external hard drives. These devices are then protected by various forms of multi-factor authentication to keep your crypto safe.

Because you don’t need to be 18 years old to own crypto (just to buy and sell it), it’s possible for an adult to purchase crypto and store it on one of these hardware wallets. Then, the adult can simply pass that wallet onto a kid alongside your security credentials. 

The kid will then be able to access the crypto and spend it however they want — but only when they come of age.

If you’re careful, a hardware wallet can be a super secure way to hold crypto. But the primary risk is that you (or the kid you’ve given it to) may lose the login credentials over time. This could potentially turn a major investment into the most expensive paperweight you’ll ever have.


At the end of the day, buying crypto can be pretty tricky if you’re a kid. That means if a kid wants to invest in crypto, they’re generally going to need an adult to help them do it.

There are a few different options out there, and each one has its own set of pros and cons. But one of the most flexible (and safest) ways to invest in crypto for kids is by setting up a UGMA custodial account through a custodial account provider like EarlyBird.

So, are you ready to start gifting crypto? Download the EarlyBird app today.