Crypto teens are making bags with their digital assets, or so they say. Is this possible in Australia?
In the online wonderland that is TikTok, there are a growing number of vids that say teens are making tasty profits by trading in crypto. While we can take these wild claims with a grain of salt, pepper and probably mustard too, it is an interesting idea.
Should crypto only be the realm of adults? Or should teens muck in and learn to use it as well?
Senator for New South Wales Andrew Bragg told The Chainsaw that the heart of the problem is that Labor has locked Australia in the crypto regulatory slow lane.
“Australia was on track to have crypto regulations implemented by the end of 2022. But because Labor abandoned these regulations when they came to power, crypto will remain unregulated until at least 2026. Without regulation, it is unclear whether crypto and other digital assets should be treated under Australian law.
“Currently, the only thing stopping teens from purchasing crypto are the gatekeepers who operate exchanges. The Labor Government can end this regulatory ambiguity by prioritising the implementation of crypto regulations. However, crypto regulations are not a priority for Labor, because their favourite vested interests in the big super funds and the unions haven’t asked for it.”
Dr Rand Low, Associate Professor of Quantitative Finance, Bond University, is in favour of young people learning to use crypto.
“Everyone should learn how to use crypto as it is a new technology that has the potential to change how we perform financial transactions or perform record-keeping in the future,” he told The Chainsaw.
But, he added, the focus should be on the “learning opportunity for exposure to a new technology, not as a get-rich-quick scheme.”
There are plenty of TikToks of teens paying for items in crypto.
And there are even teen crypto influencers on every platform in existence.
But not everyone wins in teen cryptoland, of course.
In Australia, is it possible for teens to buy crypto?
Yes. There are two ways to do it. One is to get a parent or guardian to buy it on their behalf and let them run sh*t. The second is, if you are 16 or over you can buy crypto on CoinSpot.
“On CoinSpot the minimum age limit is 16 years old to buy cryptocurrency. Responsible investing is very important, so this is in place to support young Australians who are interested in the technology,” Ray Osthmuller, CoinSpot Executive told The Chainsaw.
“Banking laws and cryptocurrency have some crossover, however there are still nuances which regulators are constantly considering. We will continue to support sensible cryptocurrency regulation that improves the industry whilst helping to protect investors young and experienced.”
Crypto exchange Swyftx requires customers to be 18 years of age or over — which is consistent with the age restrictions on investments in traditional asset classes like shares. Other major exchanges have different age limits.
Is buying crypto bad for kids?
Dr John Hawkins, senior lecturer, School of Politics, Economics and Society, University of Canberra told The Chainsaw kids shouldn’t be “encouraged to gamble”.
“Crypto is not a currency, it’s a speculative token,” he said.
Dr Low said crypto remains an unregulated industry due to the decentralised nature of the technology.
“Therefore young users of crypto technology need ‘training wheels’ as it’s easy to be over excited about promises of the latest crypto-coin or blockchain technology and invest more money than you can afford,” he said.
Dr Low added that while some people consider crypto to be a currency, fiat currency like the Australian dollar is backed by the government.
“Cryptocurrency is not backed by any government. Therefore cryptocurrency is more risky, and I recommend individuals to be over 18 to hold it,” he said.
Dr Low said this is for the protection of the young individual to avoid them losing their savings to financial scams.
“The underlying blockchain technology is far more powerful than just being a medium of exchange, therefore cryptocurrency will need new laws and regulations that are fit for purpose”.
Teens and crypto: Pros and Cons
Financial Education: Cryptocurrency investment offers young individuals the opportunity to learn about finance, economics, and the principles of investment. By navigating the world of digital currencies, teenagers could develop a strong sense of financial responsibility and learn how to manage their assets effectively.
Diversification: Diversifying one’s investment portfolio is a key strategy to mitigate risks. Investing in cryptocurrencies allows 16-year-olds to diversify their investments beyond traditional assets or even just having savings.
Potential for Growth
Some cryptocurrencies have experienced huge growth over the past decade. While past performance is not indicative of future results, the potential for substantial returns on investment in the cryptocurrency market is a compelling factor for young investors.
Accessibility: Cryptocurrency markets are accessible to anyone with an internet connection, making them highly inclusive. Young investors can start with relatively small amounts of money and gradually increase their investments as they become more comfortable. This low barrier to entry enables teens to participate in the financial markets at an early age.
Technological Literacy: In this digital age, understanding technology and digital trends is crucial. Investing in cryptocurrencies offers teens a unique opportunity to gain insights into blockchain technology, encryption, and digital finance. These are valuable skills in a world increasingly reliant on digital assets and technology.
Long-Term Planning: Investing in cryptocurrencies can encourage long-term financial planning. Young investors can set clear financial goals and strategies for their future, whether it’s for education, a home, or retirement. The earlier one starts investing, the more time they have to harness the power of compounding and potentially achieve their financial objectives.
Learning from Mistakes: Investing in cryptocurrencies isn’t without risks. However, making mistakes is an essential part of the learning process. By investing at a young age, individuals can develop resilience and learn from their experiences, better preparing them for future financial decisions.
High Volatility: Cryptocurrencies are notorious for their extreme price fluctuations. The value of a cryptocurrency can skyrocket one day and plummet the next, often without any clear explanation. For young investors who may not have the experience or emotional resilience to weather such market turbulence, these rapid swings can lead to financial stress and anxiety.
Lack of Regulation: The cryptocurrency market operates with limited regulatory oversight, making it susceptible to fraud, scams, and market manipulation. Teens may not have the financial sophistication to discern legitimate investment opportunities from deceptive schemes, putting their hard-earned money at risk.
Lack of Understanding: Jumping into crypto without a solid grasp of the underlying concepts can lead to financial losses and missed opportunities.
Emotional Investment: Teenagers often have limited experience managing their emotions, which can be a significant disadvantage in the highly emotional and speculative world of cryptocurrencies. Fear and greed can lead to impulsive decisions, such as panic selling during market downturns or buying into hype without a proper analysis.
Financial Responsibility: Most teens are still financially dependent on their parents or guardians. Investing in cryptocurrencies may lead to financial stress and disagreements within the family.
Uncertainty: The cryptocurrency market is still in its infancy and constantly evolving. The future regulatory landscape, technological developments, and market trends are highly uncertain.
Financial Goals: For teens, financial goals often include saving for higher education, a car, or other immediate expenses. Cryptocurrency investments are typically long-term in nature, and it may not align with the financial objectives of young individuals who require more liquid assets.
Crypto teens: Conclusion
While many teens are encouraged to invest in traditional markets, investing in crypto seems like a bit of a wild card. However, soon, Bitcoin may be considered a mainstream investment in the not too distant future.
Teens? Start reading up on the world of cryptocurrencies, just in case.